Insurers To Test VA Reserving Method

Insurers participating in the reserving survey must calculate principle-based reserves on “significant blocks of in-force product types using the assumptions and methodology for calculating reserves as defined by the September Exposure Draft of VACARVM,” Bruning wrote in the Oct. 20 letter.

The results should be interesting, because the proposed principles-based VA reserving system would be based on companies compiling their own data and using regulatory benchmarks to evaluate company assumptions, Bruning says.

Bruning’s fellow regulators have been talking about how to design the survey to accommodate the wide variety of VA living benefits now on the market.

Some say asking insurers to assess a single scenario should be enough, and they note that requiring an insurer to address 100 assumptions could take 35,000 computer runs and weeks of work. Other regulators say they want to see what the insurers’ actual reserves would look like.

In other actuarial news, Dave Sandberg, vice president of the AAA’s life practice council, downplayed the likely effects of reform efforts by the International Association of Insurance Supervisors, Basel, Switzerland, on the U.S. market.

The international effort should not have much effect on the United States, because the IAIS and U.S. regulators have been taking a similar approach, and the IAIS is developing general principles that allow countries to use their own preferences in areas such as governance and conservatism, Sandberg said during the recent AAA Webcast.