An arm of the National Association of Insurance Commissioners is trying to find out how insurers will apply a principles-based approach to computing variable annuity reserves.
The regulators hope to have results of an insurer VA reserve survey back by the end of the year, according to Larry Bruning, chief actuary with the Kansas Department of Insurance.
Bruning is chairman of a subgroup at the NAIC, Kansas City, Mo., that is helping to develop Actuarial Guideline VACARVM-CARVM, a set of rules that would help insurers, actuaries and others apply the Commissioners Annuity Reserve Valuation Method to variable annuities and other products that offer guaranteed benefits.
The guideline is one of several NAIC efforts to shift the insurance industry toward a flexible, “principles-based” approach to actuarial work.
Under the new approach, actuaries would feed hypothetical data into models, or collections of equations, that would show how a product or product feature might perform under a wide range of scenarios.
Advocates of the principles-based approach want the NAIC, insurers and regulators to shift away from reliance on static formulas.
Bruning has talked about the NAIC’s VA reserving survey in an Oct. 20 letter and during a recent Webcast sponsored by the American Academy of Actuaries, Washington.