A trade organization representative has told a regulators' task force considering new loss reserve regulations for insurers that they need not include the property-casualty carrier, since existing rules already cover them.

"I hope it is clear that this should not apply to property-casualty reserves because P-C reserves are already based on principles-based reserving," said Steve Broadie, vice president-financial legislation and regulation with the Property Casualty Insurers Association of America, Des Plaines, Ill.

His comments came during a regulators' session on a principles-based reserving project that is advancing through the National Association of Insurance Commissioners, Kansas City, Mo.

Mr. Broadie's concerns were echoed by some regulators during the discussion of work to-date on the project.

He noted that the development of international solvency standards seems to be moving in a very different direction than regulation in the United States with the discounting of loss reserves in risk margins. And, he continued, there is "extreme reservation" that the United States could follow suit. Regulators need to look more at this issue, he said.

Lou Felice, chair of the capital adequacy task force, which is offering feedback of the work of the NAIC's principles-based working group at the group's request, said it was his understanding that the initiative was one under consideration on the life side of the business for several years now.

Life insurers, regulators and actuaries started to look for a more seamless reserving approach in response to reserving questions over creative product interpretations that kept surfacing following adoption of Guideline Triple-X, an actuarial guideline designed to address reserving concerns for term and level premium life insurance products.

He added, "To the extent appropriate, we are going to try and be consistent with what is going on internationally."

Another point raised during the regulators' discussion was whether there needed to be a review of certain models because of the reserving changes that could occur over the next few years.

The Model Investment Law and the Hazardous Financial Conditions model regulation were two models that were mentioned as candidates for review in light of the proposed changes.

Principles-based reserving is a project that has been under discussion for over three years.

The American Academy of Actuaries and regulators of the Life & Health Actuarial Task Force have been working on the project since its start. And, according to the Academy, actuaries on its work teams are nearing a final report that includes principles-based reserving recommendations.

Special Reports /

P-C Reserve Rules Fine As Is, Says PCI

Related Stories

Recommended For You