Implementing an actuarial guideline would be easier and quicker than creating a new law or regulation, but a new law or regulation might provide more legal certainty, officials say.
NAIC officials also are interested in issues such as due process and consistency with the existing Standard Valuation Law, the law actuaries now use to determine annuity reserves.
If state legislatures had a chance to discuss and vote on the proposed changes, or state insurance regulators had to go through their standard rulemaking procedures, that would help ensure that insurers would receive due process, officials say.
Some officials have suggested the NAIC could proceed by including new VA guarantee reserve requirements in the NAICs Accounting Practices and Procedures Manual, but Sheldon Summers, a California regulator, has pointed out that the APPM applies only to contracts dated Jan. 1, 2001, or later. Creating new VA guarantee reserve requirements by including them in the APPM could leave treatment of earlier contracts in question.
One possible answer, according to Bill Carmello, a New York regulator, would be to include a floor for reserves that would conform to the Standard Valuation Law.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 20, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
