The National Association of Insurance Commissioners has updated the Standard Valuation Law to reflect “principles based” reserving ideas.
Members of the NAIC, Kansas City, Mo., approved the changes at a joint session of the group’s executive committee and its plenary, a group that includes all voting members of the NAIC.
The NAIC held the session at its fall meeting in National Harbor, Md.
The SVL is a model that states can use when setting standards for life reserve calculations. If the proposed revisions are approved, the SVL would embody a “principles-based” approach to calculating reserves.
Advocates of principles-based reserving want life insurance reserving decisions to be based on modern statistical forecasting techniques and sound actuarial judgment, rather than on static formulas.
Members of the NAIC’s Life Insurance and Annuities Committee endorsed the proposed SVL revisions Sept. 9.
Before the SVL revisions can have much effect, the NAIC must change the Valuation Manual used by actuaries to interpret the SVL when set reserves.