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Life Health > Life Insurance

Life Group Aims to Reboot

By Allison Bell

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A group that helped push the United States to shift toward adopting principles-based reserving for life insurance and annuity products wants to declare victory and move on to other projects.

Scott Harrison, the executive director of the Affordable Life Insurance Alliance, says the alliance aims to use its success in the area of principles-based reserving to become a force for promoting other forms of insurance regulation modernization.

Insurers could change the way they set reserves because technology gave them more information, and better ways to analyze the information, Harrison said. Now, he said, “information is changing the way consumers interact.”

(Related: AG 38 Adopted: Check Your Life Reserves in the Rearview Mirror)

Consumer access to data and tools will change the relationship between insurers and their customers, and improved tools will continue to change the insurers, Harrison said.

“Insurance companies have always been very expensive to form,” he said.

Now, he said, companies are finding it easier and cheaper to start insurance providers.

The regulatory framework has to change to reflect the rise of innovations such as social media marketing methods and automated sales systems, Harrison said.

Harrison, a lawyer who started out in the insurance departments in Delaware and New York state, said the alliance and the insurers supporting it want to take a similar approach to new regulatory modernization projects that they took to principles-based reserving.

The shift to principles-based reserving involves a shift toward use of modern statistical analysis tools, rather than static formulas, to decide how much capital an insurer needs to support its products. The Affordable Life Insurance Alliance promoted the shift mainly by helping regulators, lawmakers and other policy shapers understand what principles-based reserving is and how the shift might work, by issuing reports, submitting comment letters, organizing conferences, and speaking at other organizations’ meetings.

The alliance hopes to supplement and amplify the work other industry groups, such as the American Council of Life Insurers, are already doing, rather than displacing the other groups’ work, Harrison said. 

— Read New York Agrees to Industry-Backed Insurer Reserve Rules on ThinkAdvisor.

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