New York Actuaries Chime in on Net Premium Reserving
June 1, 2012 by Elizabeth Festa
Conference call is held on creating a manual for principles-based reserving
May 24, 2012 •
The NAIC’s Life Actuarial Task Force (LATF) of the Life Insurance and Annuities (A) Committee debated net reserving methodology changes proposed by the American Council of Life Insurers (ACLI) today for universal life insurance products with secondary guarantees, with actuaries from New York, Bill Carmello and Amanda Fenwick expressing concern for the proposed reserving methods.
The process is part of ongoing work to develop a valuation manual for creating a principles-based reserving (PBR) roadmap that will be up for adoption by the committees and then the NAIC later this year, so it can go to the state legislatures for adoption next year—or, at least that is the goal. Forty-two state bodies need to pass PBR so 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.
The Standard Valuation Model Law with the PBR approach was adopted by the NAIC in 2009. For 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. Click here to read more…