NAIC Life and Health Insurance October, 2008 Update

Following is a recap of National Association of Insurance Commissioners (“NAIC”) life and health insurance-related meetings held during the month of October.

 

Medicare Part D Updates

The Health Risk-Based Capital Working Group has approved sponsorship of the Medicare Part D Survey through an e-mail vote.  To view the Survey, click here.

At its October 10 meeting, the Health Risk-Based Capital Working Group released the following documents for public comment:

• Risk-Based Capital Instructions
• Risk-Based Capital Formula Page

The public comment period for these documents closes at the close of business, Monday, November 10, 2008.

 

Medicare Supplement Refund Formula (“Formula”) Updates

To view the July 22 Formula Request for Assistance, click here.

To view the September 15 Formula review from the American Academy of Actuaries (“AAA”), click here.

 

AAA C-3 Phase II Report

On October 31, 2008, the NAIC Life Risk-Based Capital Working Group will meet to discuss the July 2008 AAA C-3 Phase II Report exposure draft put forth by the AAA Life Capital Working Group.

To view a copy of the July 2008 exposure draft, click here.

To view the meeting agenda and materials, click here. 

Agenda items included in the meeting materials packet include:

• Comment letter from General Electric
• Comment letter from the American Council of Life Insurers (“ACLI”)
• ACLI solvency principles
• AAA September 2008 Report of the Life Capital Work Group
• AAA Proposed Simplification Methods
• AAA Changes to the Life Risk-Based Capital Instructions

 

Valuation Method Updates

The NAIC has held a series of Life and Actuarial Task Force (“Task Force”), and Valuation Method Principles-Based Reserve Life and Reinsurance Subgroup (“Life Subgroup” and “Reinsurance Subgroup”) meetings during the month of October to discuss proposed amendments to Valuation Method-20: Requirements for Principle-Based Reserves for Life Products (“VM-20”),Valuation Method-30: Actuarial Opinion and Memorandum Requirements (“VM-30”), and Valuation Method-31: Reporting and Documentation Requirements for Business Subject to a Principles-Based Valuation (“VM-31”).

 

VM-20 Updates

To view the VM-20 exposure draft, dated September 22, click here.

To view the VM-20 working draft, dated October 15, click here.

The following are proposed amendments to VM-20 were considered during the October Task Force and Subgroup meetings:

•  VM-20 Amendments 080922 001, 002, 010, 015
  • 080922 001–Definition of requirements for a reinsurance treaty to be included in the reported reserve by the Reinsurance Subgroup
  • 080922 002–Definition of requirements for a reinsurance treaty to be included in the reported reserve by Sheldon Summers, California Department of Insurance
  • 080922 010–Amendment to the credit for reinsurance by Amanda Fenwick of New York
  • 080922 015–Revised language to describe requirements for gross reserve and reinsurance credit by the ACLI
• VM-20 Amendments 080922 003-009, 011-014, 016-018
  • 080922 003–Amendment to the prescribed default assumptions on below investment-grade assets by David Neve, Chairman of the AAA Life Reserve Work Group
  • 080922 004–Amendment to the discount rate by Fred Andersen from the New York State Insurance Department
  • 080922 005–Amendment to the assumptions for stochastic exclusion test by Arnold A. Dicke, Principal, AADicke Consulting
  • 080922 006–Revision of additional margin needs when projecting non-guaranteed elements (“NGE”) by John Bruins from the ACLI
  • 080922 007–Amendments to the treatment of NGE in the calculation of principles-based reserves by Daniel J. McCarthy, FSA, MAAA
  • 080922 008–Deletion of certain references to net asset earned rates  by the AAA Life Reserves Work Group, David Neve, Chair—
  • 080922 009–Amendment to the discount rates on accumulated deficiencies for scenario by David Neve, Chairman of the AAA Life Reserve Work Group
  • 080922 011–Amendment to assumptions that vary by scenario by Amanda Fenwick from New York
  • 080922 012–Amendment to the assumption setting and margin in each assumption by Fred Andersen from New York
  • 080922 013–Amendment to the equity returns in deterministic reserve by Fred Andersen from New York
  • 080922 014–Clarification of the financial institutions & professional registration reporting requirements for sensitivity testing and varying assumptions by David Hippen, Life & Health Actuary, Missouri Department of Insurance
  • 080922 016–Amendment to expand and clarify the requirements dealing with aggregation of policies by David Neve, Chairman of the AAA Life Reserve Work Group
  • 080922 017–Amendment designed  to make the NGE requirement consistent in all Valuation Methods by Bob DiRico, Chair, AAA Consistency Work Group
  • 080922 018–Amendment to require disclosure of sensitivity testing results for all material assumptions, and to delete the requirement that a higher margin be established when there is greater sensitivity of the assumption on the minimum reserve by David Neve, Chairman of the AAA Life Reserve Work Group

 

The following are letters expressing opposition to the proposed amendments considered during the October Task Force and Subgroup meetings:

• AAA July 15 Opposition to Amendment 080329 005 Letter
• ACLI July 15 Opposition to Amendment 080329 005 Letter
• ACLI July 29 Opposition to Amendment 080329 025 Letter

The following are issues proposed amendments to be addressed during the October Task Force and Subgroup meetings:

• List of Issues To Be Addressed from the Life Subgroup
• AAA September 18 Survey to the Task Force Regarding VM-20 Concerns

 

VM-30 Updates

To view the VM-30 exposure draft, dated September 22, click here.

The following proposed amendments to VM-30 were considered during the October Task Force and Subgroup meetings:

• VM-30 Amendments 080922 001-004080922 001–Amendment to the definitions listed in VM-30 by William Weller, Consultant to AHIP
  • 080922 002–Typographical amendment by John Bruins from the ACLI
  • 080922 003–Clarification of  what is subject to the Standards of Practice by John Bruins from the ACLI
  • 080922 004–Amendment to actuarial option differing from those listed in other Valuation Methods by Mike Boerner from the Texas Department of Insurance

 

VM-31 Updates

To view the VM-31 exposure draft, dated September 22, click here.

The following are proposed amendments to VM-31 that were considered during the October Task Force and Subgroup meetings:

• VM-31 Amendment 080922 001
  • 080922 001–Amendment to the general requirements by Katie Campbell from the Alaska Division of Insurance

 

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