Principles-Based Reporting (PBR) for the calculation of statutory reserves for life insurance is on its way for possible adoption by the NAIC this summer, if the NAIC’s Life Actuarial Task Force (LATF) pushes forward on its work, according to a task force conference call today.
LATF members are looking at a mid- to late June time frame for adoption of a valuation manual, they said. Then, the project would move to the full NAIC for adoption, likely at its national meeting in Atlanta this August.
There may be less time for re-exposure of edits to key documents, LATF task force members noted, but said that work will continue after June, and if some issues are put to bed prematurely, there will be time to “wake them up,” a key LATF member said on a conference call May 3.
There will still be time after June to make sure additional areas are covered, Mike Boerner, Managing Actuary at the Texas Department of Insurance an the task force said.
It is important for the NAIC to have adoption this year in time for consideration by state legislatures in 2013, when most meet, many have said. Otherwise, without introduction and critical mass of state passages, PBR effective dates and implementation could be delayed. PBR adoption has already been delayed, as it was not ready at the March meeting.
Forty-two state legislatures are needed to get the PBR valuation manual officially passed, and implementation is seen by many as three years away, or January 2015, under this scenario, and time is growing short.
“We can’t wait until everything is perfectly clear and acceptable—sometimes you have to move forward,” said one state actuary on LATF back in December.
With the assistance of the American Academy of Actuaries (AAA), LATF has been working on a new life reserve standard, “VM-20”, which is expected to apply to all individual life insurance business, except pre- need and credit life business. It is expected that VM-20 will apply only to new business written on or after the effective date of the new standard, as he AAA has stated.
A revised Standard Valuation Law was adopted by the NAIC in 2009 and the associated Valuation Manual, as it relates to life insurance statutory reserving, is the almost-finished result, according to the AAA.
There will be additional LATF conference calls for the next few Thursdays in May to work on VM-20, with an American Council of Life Insurers (ACLI) amendment proposals to be discussed, as well.
The ACLI is seeking to change the definition of “secondary guarantee” as a guarantee spanning more than five policy years (including any renewals) that a policy will remain in force for the secondary guarantee period) even if its fund value is exhausted, subject to one or more conditions and revise the description of lapse for net premium reserves for premium-based products.