UPDATE: NAIC Executive/Plenary Adopted the Phase 1 elements of the AG 38 Framework this morning, March 6, at the Joint Plenary-Executive Committee Meeting in New Orelans.
New Orleans–The National Association of Insurance Commissioners (NAIC) is set to pass the first step in setting a formal course for the resolution of the thorny issue of Actuarial Guideline 38 at the meeting of the NAIC Executive Committee and Plenary here Tuesday.
As regulators like the initiative’s leader Texas Insurance Eleanor Kitzman are quick to point out, the part of the framework voted upon is limited in scope to just Phase 1 of the draft framework agreeing on a bifurcated approach and the hiring of outside consultants.
The bifurcated approach to calculating reserve methodologies for these products referred to by the NAIC’S Joint Working Group of the Life Insurance and Annuities (A) Committee and the Financial Condition (E) Committee is to in-Force versus prospective business. Both the A and the E Committee voted the measure up to the Executive Committee.
The hiring refers to the decision by the NAIC to retain one or more independent, consulting actuaries to advise the Joint Working Group with respect to the actuarial issues involved now and in the future with input from regulatory actuaries and interested parties.
Kitzman promised a through and open vetting process for future committee work. Industry is concerned about the extent to which reserves for in-force business may need to be raised for their book of business, if at all, and the tax ramifications of any reserve increases. Some state actuaries are concerned about companies keeping adequate reserve levels for these products.