NAIC Panel Hears About Problems

The NAIC’s Capital and Surplus Relief Working Group referred one proposal – that insurers be able to include more of the income tax refunds they are expecting and other “tax assets” in their capital and surplus totals – to the Statutory Accounting Principles Working Group.

The Statutory Accounting Principles Working Group has made a draft of a deferred tax asset provision available for comment.

The Statutory Accounting Principles Working Group “plans to conduct conference calls to discuss the recoverability of deferred tax assets, and relationship of the proposed language to existing model laws,” officials write in the activity summary for that working group. “[The insurance] industry was specifically requested to demonstrate whether there is an economic need to change the language.”

The Life and Health Actuarial Task Force is making other capital and surplus-related drafts available for public comment.

The task force “exposed” a draft of the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities, along with drafts of Actuarial Guideline 1c and the Valuation of Life Insurance Policies Model Regulation, which deal with the details of how insurers can use the preferred mortality tables in reserve calculations.

In related news, members of the Capital and Surplus Relief Working Group agreed that they should take a look at the current system of “permitted practices,” or insurers’ use of an individual state regulator’s permission to use accounting practices that appear to differ from the standard statutory accounting practices.

The working group will look at the definition of a “permitted practice,” the requirements surrounding requests for permitted practices, the processes used to determine whether to grant the requests, and related matters, officials write.