The upcoming NAIC meeting later this week will spotlight work on the vaunted Valuation Manual as it heads toward completion, but with regulators inching toward a vote, it was uncertain whether the matter would reach the full NAIC membership by the last national meeting of the year.
The goal has always been to have the manual ready before the 2013 legislative season, and the adoption has been a moving target all year, with revisions and edits powering through to the understood finish line of year-end 2012.
NAIC full state membership is due to consider adoption of the Valuation Manual at the Fall National Meeting at National Harbor, Md.
Forty-two state bodies need to pass it so that it can become the defacto model of reserving by 2015.
The NAIC has been moving from formulaic approaches to reserving with the advent of new product designs to PBR methods over the past 10 years.
According to the most recent draft of the Executive Committee and Plenary session meeting Dec. 2, the Valuation Manual is on the agenda, item number nine, although an industry source said that the vote count is not certain.
The Valuation Manual sets forth the minimum reserve and related requirements and its terms needed to be adopted or otherwise enacted by jurisdictions to be operative.
The Standard Valuation Model Law with the PBR approach was adopted by the NAIC in 2009. For Principles-Based reserving methodology (PBR) to go forward, the Valuation Manual (VM) must first be adopted, with VM-20, the requirements for PBR for life products, having taken the bulk of time and effort, with impact studies done by actuarial firms for the industry over the course of many months.
The reserve requirements in the Valuation Manual satisfy the minimum valuation requirements of the Standard Valuation Law. Life Insurance and Annuities Committee Chair and Tennessee Commissioner Julie Mix McPeak noted that the Valuation Manual is still a work in progress while speaking during the most recent teleconference meeting this month. She pointed to the continuing work of the Life Actuarial Task Force (LATF) to address issues through the amendment process.
McPeak also stressed, according to the minutes of a Nov. 13 meeting, that the Valuation Manual and the amendments adopted so far remain under the parent committee’s jurisdiction while LATF works through remaining issues.
Commissioner McPeak at the time noted that she anticipates “discussion” of the Valuation Manual at the Fall National Meeting.
The Principle-Based Reserves (PBR) Valuation Manual got the nod from the Life Committee during a vote in mid-August and then underwent revisions this fall.
The motion passed with a “No” vote by New York’s insurance regulator, and abstentions from Minnesota and California. New York’s insurance regulatory arm had not responded to a query by presstime. The New York Department of Financial Services holds some cards in the process, as always, and there have not been public signs of approval yet, although things could change.