A National Association of Insurance Commissioners panel has cleared a pair of major life insurance underwriting proposals for top-level review.
Regulators serving on the NAIC's Life and Annuities Committee have endorsed a 2-part package that would set temporary rules for reserves for universal life insurance policies with secondary guarantees and create temporary preferred mortality tables.
The NAIC's executive committee now must decide whether to let the plenary – the body of all voting NAIC members — vote on the package.
The executive committee and plenary of the NAIC, Kansas City, Mo., will next meet at the NAIC's 4-day fall meeting, which is set to start Sept. 9 in St. Louis.
The UL half of the package consists of an update to Actuarial Guide 38 for universal life products with secondary guarantees. The proposed update explains how insurers should proceed when using assumptions on policy lapse rates in efforts to establish reserves.
Many regulators, actuaries, insurance company executives and others are hoping states will move to a new, more flexible, principles-based approach to reserving that will eliminate the need for rigid rules on UL reserving.
Jim Poolman, North Dakota insurance commissioner and chair of the Life and Annuities Committee, added 2 provisions to the UL measure.
One, a sunset provision, would cause the UL measure to expire Dec. 31, 2010, in anticipation of development of a full-fledged principles based reserving system.
The other new provision calls for asset adequacy testing, to reassure regulators who favor a more conservative approach to reserve calculations.
Some regulators complained Monday during a meeting of the NAIC's Life & Health Actuarial Task Force that using lapse-supported assumptions in UL reserve calculations clashes with the Standard Valuation Law.
Along with the UL measure, the life underwriting package advanced today also includes a section that would create temporary preferred mortality tables, by splitting the current 2001 Commissioners Standard Ordinary mortality table.
