Discussion on how a principles-based draft document that is a basis for creating a new system for reserving and capital can be improved is currently underway.
Regulators in different work groups of the National Association of Insurance Commissioners, Kansas City, Mo., have been discussing over the last 2 weeks how they will opine on the contents of the draft.
During the fall NAIC meeting in Washington, Sept. 28-Oct. 1, the principles-based working group of the NAIC’s Executive Committee under the direction of Thomas Hampton, commissioner of the District of Columbia, will be reviewing comments to determine how to advance the project.
Aspects of the project such as the work of the American Academy of Actuaries, Washington, under development for over 2 years, are coming nearer to completion.
Members of the Life & Health Actuarial Task Force are set to vote on changes that were discussed on a recent conference call.
Among the modifications discussed in the LHATF response are: Principles that call for uniformity, transparency and objectivity, among other points; and a regulatory framework that is consistent with principles of the International Association of Insurance Supervisors, Basel, Switzerland.
Principles, the document reads, should among other things:
–Require periodic financial examinations of insurance entities including analysis and review of all financial information filed in the central data base as well as on-site inspections to determine if the insurance entity is in compliance with all laws and regulations.
–Regulatory capital that should be required to provide a solvency margin to reflect the risk of potential adverse deviation in the anticipated experience assumptions used in the measurement of the risks reflected in the reserve liability.
The NAIC’s Capital Adequacy Task Force also discussed the document distributed by the PBR work group.
Several concerns were raised. Chief among them was concern among representatives of the property-casualty industry that it not be included if the project is adopted by the NAIC.
There was also concern that inclusion of both reserving and capital principles in one document may prove cumbersome and that each should be covered in separate documents.