PBR in Practice
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 started 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 the following materials to assist actuaries and regulators as the U.S. moves into the implementation phase of PBR for life insurance.
|ACADEMY PBR TOOLKIT|
PBR Overview: Resources that provide the mechanics of PBR, as well as industry practices and guidance in performing a principle-based valuation.
Implementation Tools: Resources that provide tools and frameworks to assist actuaries in implementing principle-based valuations.
|ACADEMY COMMENTS ON PBR|
|ACADEMY PUBLICATIONS ON PBR|
|PBR PRACTICE NOTES|
|ACADEMY PRESENTATIONS AND STATEMENTS ON PBR|
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)
|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.