An actuarial consulting firm says the National Association of Insurance Commissioners should forge ahead with efforts to update life insurer reserve and asset valuation requirements.

The firm, Milliman Inc., Seattle, says it is working with the NAIC, Kansas City, Mo., and the American Council of Life Insurers, Washington, on the reserve and valuation requirements, and also helping to develop new capital standards.

The new standards would better reflect the underlying economics of the life insurance business than the current standards do, according to Milliman Chairman Bradley Smith.

Standards that are too tough can cut insurers off from outside sources of additional capital, hurting insurers’ ability “to operate effectively in the best interests of their policyholders,” Smith says.

Milliman believes the new standards should reflect insurers’ moves to hedge product guarantees and take other steps to lessen exposure to market risk, Smith says.