NAIC Advances Bifurcated Approach to AG 38
March 12, 2012 by Jeff Jeffrey
March 05, 2012
| By Jeff Jeffrey |
| A.M. Best Company, Inc. |
The National Association of Insurance Commissioners’ Financial Condition Committeesigned off on a proposed bifurcated approach to applying Actuarial Guideline 38 to universal life contracts with secondary guarantees and term universal life products, moving it one step closer to being officially endorsed by the organization.
The bifurcated approach would allow the NAIC to apply AG 38 differently to closed blocks of business and new business. The Financial Condition Committee also voted at the NAIC’s spring meeting in favor of allowing the joint working group to hire outside actuaries to help in the fact finding and analytical assessment of the products in question.
The Financial Condition Committee’sMarch 5vote followed a similar voteMarch 4in which theLife and Annuities Committeeapproved the approach. The approval of both committees was necessary because the NAIC formed a joint working group made up of members from each to study the AG 38 issue.
The measure will now be presented to the Executive Committee and the NAIC plenary. The joint working group needs the bifurcated approach to be approved by the full NAIC before it can begin investigating the AG 38 issue in greater detail, said Texas Insurance CommissionerEleanor Kitzman, who chairs the joint working group.
Debate on the AG 38 issue reached a fevered pitch last year, prompting the NAIC to form the joint working group in November. The group was created in an effort to scale back the rhetoric on the issue that was set off last year after some state regulators questioned the legality of how companies were setting up reserves for certain universal life insurance products (Best’s News Service,Nov. 5, 2011).
The AG 38 issue is one NAIC PresidentKevin McCarty, who serves asFlorida’sinsurance commissioner, has said is among the organization’s top priorities.
(ByJeff Jeffrey, Washington Correspondent: jeff.jeffrey@ambest.com)
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(c) 2012 A.M. Best Company, Inc. |
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