One of the leading advocates of a new approach to reserving is calling for colleagues to stand firm against critics who prefer the current formula-based approach.
“What we are starting to hear is an attempt to turn against principles-based reserving,” Mike Batte, a New Mexico state insurance regulator, said here at the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., during the Life and Health Actuarial Task Force meeting.
Opponents “are beginning to come out of the woodwork to kill this thing,” Batte said. “If you believe in principles-based reserving, I urge you to push for this now. We are at a pivotal point right now. This project is either going to die or it is going to move forward. The only way we are going to move forward with principles-based reserving is to get consensus at the commissioner level…. Don’t let the effort of the last 5 years die because of fear of change.”
Before Batte spoke, Michael Cebula, a New York regulator, referred to results from a survey conducted by Tillinghast, Stamford, Conn., that found that 82% of participating chief financial officers suspected that a principles-based approach to reserving could lead to insurers gaming the system.