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December 11, 2006 at 01:21 PM
Regulators have to make sure that new rules for calculating capital requirements do not saddle insurers with unnecessary work or have unintended effects on insurers’ solvency, an industry representative says.
John Bruins, a life actuary representing the American Council of Life Insurers, Washington, made that plea for caution here at the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., in response to an update on the C-3 Phase III project presented by Peter Boyko, chair of the life risk-based capital working group at the American Academy of Actuaries, Washington.
The current version of the C-3 Phase III proposal “is very broad in scope,” and, “from an application standpoint, it exponentially increases the work of companies,” Bruins said.
Implementing the current version of the rules could affect some insurers’ financial strength ratings, and it could move the bar for measuring solvency enough to push some insurers into insolvency, Bruins said.
“There is a lot going on here,” Bruins said. “We don’t take solvency lightly and we shouldn’t be looking at [C-3 Phase III] lightly.”
Mark Birdsall, a representative for the National Alliance of Life Companies, Sarasota, Fla., urged that the people working on the C-3 Phase III project think about the importance of simplicity as the project progresses.
