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Life Health > Life Insurance

NAIC Might Create Number Collector

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Insurance regulators are talking about the nuts and bolts of setting up a statistical data agent to handle data for preferred mortality tables.

Members of the Life & Health Actuarial Task Force of the National Association of Insurance Commissioners, Kansas City, Mo., say any preferred mortality statistical agent framework created could shape future efforts to move to a principles-based reserving system.

NAIC Model 815, the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities, includes a provision permitting insurers to use a designated statistical agent to file mortality reports with state regulators.

The statistical agent would collect and prepare preferred mortality data for use, according to Tom Rhodes, actuarial director of MIB Group Inc., Westwood, Mass.

But Paul Graham, a life actuary with the American Council of Life Insurers, Washington, is asking whether the model regulation really requires life insurance companies to submit data.

The model appears to refer only to the filing of reports, not of data, Graham says.

Even if batches of data were to be submitted, the data might not be useful because the figures might not represent a broad enough collection of data, Graham says.

Regulators would need to establish a general principles-based reserving system before data could be collected for all lines of business and present a complete mortality picture, Graham says.

Simply collecting Model 815 data before a general principles-based reserving system was in place could result in regulators seeing skewed data, Graham says.

If insurers do use a statistical agent, the agent should keep the data received confidential, but the agent should make the data available to regulators, says Birny Birnbaum, executive director of the Center for Economic Research, Austin, Texas.

Regulators who receive the data ought to have the ability to keep the data confidential, Birnbaum says.

Birnbaum also has ideas about how the NAIC should pick a statistical agent.

The NAIC should use a competitive bidding process to choose a statistical agent, and the selection criteria should include quality of data preparation and experience with data security as well as cost, Birnbaum says.


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