Actuaries Head To Chicago

November 30, 2005 at 07:00 PM

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Insurance regulators are about to see a proposal for applying a "principles-based" approach to reviewing all individual life insurance products.[@@]

Dave Neve, co-chairman of the universal life working group at the American Academy of Actuaries, Washington, says he plans to include the all-individual-products proposal in the final work product of the academy's UL working group.

Neve is preparing to present the final work product, which includes drafts of a model regulation and 3 actuarial guidelines, Thursday in Chicago, at a meeting of the Life & Health Actuarial Task Force of the National Association of Insurance Commissioners, Kansas City, Mo.

The 3-day NAIC winter meeting officially starts Saturday, but some NAIC subgroups and other groups with an interest in insurance regulation already are holding meetings in Chicago.

Neve says the essence of the documents that he will be discussing at the LHATF meeting is the same as the essence of previous versions that the actuarial academy has been developing over the past year.

The idea of expanding the scope of the principles-based approach to all individual life products, not just UL products, follows a discussion with regulators conducted before work on a revision began, Neve says.

Advocates of a principles-based approach to coming up with minimum life insurance reserve levels and other key values want to shift to reliance on general actuarial principles and away from dependence on specific ratios. Critics say the proposed shift could let some insurers set reserve levels too low, but advocates say the shift would make life insurers more flexible while continuing to allow for vigorous regulatory oversight.

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