A panel at the National Association of Insurance Commissioners decided here this weekend to unveil Actuarial Guideline VACARVM, a model guideline that has been germinating for nearly a decade.
The model, which would help insurers apply the Commissioners Annuity Reserve Valuation Method for variable annuities with guarantee provisions, would replace Actuarial Guideline 39, a temporary guideline that was adopted in 2002. The temporary guideline was extended a few years ago and now is on track to expire Jan. 1, 2008.
Members of the NAIC’s Life & Health Actuarial Task Force voted to expose AG VACARVM here at the NAIC’s fall meeting.
Tom Campbell, chair of the American Academy of Actuaries, Washington, and a representative for the American Council of Life Insurers, Washington, emphasized the importance of adopting AG VACARVM as quickly as possible, to make sure a new, permanent guideline is in place when AG 39 expires.
Campbell rejected suggestions that the NAIC, Kansas City, Mo., ought to wait and fold AG VACARVM into a wide-ranging manual that will explain how to apply principles-based reserving methods to establishing and evaluating life insurance and annuity reserves.
Advocates of principles-based reserving methods want to move toward allowing for flexible use of modern statistical forecasting methods, away from relying on un-changing formulas.
Campbell and John Bruins, an ACLI life actuary, argued that it would be better to adopt AG VACARVM as a stand-alone model as quickly as possible.