A key actuarial panel at the National Association of Insurance Commissioners might vote on a new standard valuation law draft in December.
The panel, the NAIC’s Life and Health Actuarial Task Force, is trying to build the new, principles-based reserving approach and other updates into the law, which guides efforts to value and set reserves for life insurance products.
Members of the LHATF’s Standard Valuation Law II subgroup already have developed an SVL exposure draft. They would like to see the NAIC plenary – the body that includes all voting members of the NAIC, Kansas City, Mo. — approve the final version of the SVL in time for state legislatures to begin considering the model in 2008, according to Katie Campbell, an Alaska regulator who chairs the SVL II subgroup.
One relatively new part of the SVL II exposure draft, Section 11, deals with the standards prescribed in the valuation manual, what the valuation manual must specify, the operative dates of the valuation manual, and what companies that are using a principles-based valuation must do.
A company using a principles-based valuation would be required to “use assumptions that are set toward the conservative end of the range of plausible scenarios, to the extent that relevant and credible empirical data over the range of plausible scenarios is not available,” according to the text of the draft.
SVL II subgroup members are talking about whether and how to phase in any SVL revision that emerges.
Phasing the model in would give both states and companies time to gear up, according to John Rink, a Nebraska regulator.
Sheldon Summer, a California regulator, suggested phasing products into the new system.
Larry Bruning, a Kansas regulator and LHATF chair, proposed a 3-year transition period.