Utilizing stochastic projection models to establish valuation and capital standards was first tested with variable annuities in the early 2000s. This approach was later expanded to capital and reserve requirements for variable annuities. After validation by these smaller pilot efforts, the National Association of Insurance Commissioners (NAIC) and the Academy focused on modernizing the entire valuation process for all life insurance.
Thus, this move toward a fully modernized valuation system for life insurers will start taking place on Jan. 1, 2017, in the 46 states that have passed standard valuation PBR-enabling legislation. Insurers can begin to offer policies whose reserves are calculated using PBR while regulators will begin a new approach to analyze the valuation results. There is a three-year voluntary transition for insurers that ends Dec. 31, 2019.
The Academy has assembled materials to assist actuaries and regulators as the U.S. moves into the implementation phase of PBR for life insurance.
|ACADEMY PBR TOOLKIT||NAIC RESOURCES|
(Please note that this draft was exposed for comment through Monday, Jan. 2, 2017.)
(Please note that this draft was exposed for comment in February 2014. An updated version will be available in 2017.)
|ACADEMY COMMENTS ON PBR||ACADEMY PUBLICATIONS ON PBR|
|ACADEMY PRESENTATIONS ON PBR|
PBR Overview and Implementation Update
Academy Senior Life Fellow Nancy Bennett presentation to the National Conference of Insurance Legislators (NCOIL) National Meeting that provides an update and background on the implementation of principle-based reserving (PBR). (November 18, 2016)
PBR for Regulatory Actuaries
Academy members Dave Neve and Cande Olsen led a PBR webinar for regulatory actuaries that included a VM-20 overview with detailed examples and a summary of the PBR actuarial standard of practice exposure draft. (November 20, 2013)
Principle-Based Reserves for Life Products (second exposure draft dated June 2014)
|PBR QUALIFICATION STANDARDS|
Qualification Standards Response on PBR
What are the minimum requirements an actuary should consider to be qualified to render opinions related to PBR under the U.S. Qualification Standards? This question and answer came from the Academy’s Committee on Qualifications, which developed a list of frequently asked questions for actuaries.