Tough U.S. reserving rules and the effects of the financial crisis already are forcing insurers to increase term life prices, a reinsurer says.
Kurt Karl and David Laster, analysts in the New York office of Swiss Reinsurance Company, write in a report that term insurance prices have started to rise this year after falling sharply for 15 years.
“While many direct writers have held the line on premiums this year, some leading companies have raised term insurance premiums by as much as 10% to 15%,” Karl and Laster write. “Some have stopped writing long-term business, such as 30-year level term.”
One reason is that, in the United States, the “Triple X” reserve requirements that took effect in 2000 appear to require life insurers to hold reserves for term life business that are about twice as big as insurers think they really ought to be, the analysts write.