NAIC Panel Prepares To Test PBR Manual

Advocates say a PBR approach would force insurers to think harder about their reserves and do a better job of reserving adequately for rare, extreme "tail events."

Some critics worry that a PBR approach might be too complicated for smaller insurers to use, and other critics fear that a PBR approach would give struggling insurers the freedom to cut reserves to unrealistically low levels.

Now that the NAIC is getting close to completing the Valuation Manual, "it seems prudent to study its impact on all major lines of life insurance to avoid different sets of rules among insurers writing different lines of products," Adam Hamm, chair of the PBR Working Group, says in a statement.

LHATF will provide recommendations about the scope of the study, how the study should be conducted, the qualifications of any outside consultants to be hired, product lines to be reviewed, and the number and type of insurers involved in the study, officials say.