The New York Department of Financial Services (DFS) has informed the National Association of Insurance Commissioners (NAIC) that it no longer supports the “principles-based reserving” (PBR) approach to calculating reserves for life insurance companies.
In a letter to the NAIC, DFS Superintendent Benjamin M. Lawsky said that PBR “represents an unwise move away from reserve requirements that are established by formulas and diligently policed by insurance regulators in favor of internal models developed by insurance companies themselves.”
Effective Sept. 13, New York will let the regulation supporting PBR expire and seek higher reserves.
Superintendent Lawsky’s letter even suggested the viability of national regulation: “By outsourcing the setting of reserves to companies themselves, insurance regulators invite criticism about whether state-based regulation is truly effective.”
The DFS letter comes on the heels of its blistering criticism of “shadow insurance” this past June.
To read Lawsky’s full statement, click here.