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June 06, 2007 at 01:24 PM
The American Council of Life Insurers wants all states to adopt any new principles-based reserving rules the same way.
Regulators and others talked about principles-based reserving efforts here during the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
Advocates of the principles-based approach are trying to move actuaries and insurers away from reliance on static formulas, toward use of statistical models that reflect the possible effects of many different hypothetical scenarios on the profitability of an insurance product or an insurance company.
Actuaries and regulators are working on ways to apply the new approach to life risk-based capital, update the standard valuation model law, and create a valuation manual that would help states incorporate any changes into their regulations more easily.
Speakers said the NAIC’s new procedural rules, which require supporters of a measure to show that it has broad, deep NAIC member support before the NAIC will let them advance it as a model, should not affect principles-based reserving work.
Speakers were talking about the kind of schedule states might follow in implementing a principles-based approach.
Some regulators suggested that the NAIC might create one date that would establish when states and insurers could use the new approach and a later date that would establish when states and insurers had use the new approach.
New York wants to start off by requiring insurers to calculate reserves using both principles-based reserving and formulaic approaches until there is a comfort level with the PBR approach, according to Fred Anderson, a New York regulator.
