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October 18, 2010updated 13 Apr 2017 8:51am

Principles-based reserving on the cards for US insurers

More regulatory change is on the horizon for US life insurers following the announcement by the National Association of Insurance Commissioners (NAIC) that it is to measure the financial impact of modernisation efforts proposed for solvency regulation Our modernisation efforts promise to improve the accuracy with which regulators and companies match reserves to risk," said Thomas R Sullivan, chairman of the NAIC Life Insurance and Annuities Committee, and Connecticut insurance commissioner.

By LII editorial

More regulatory change is on the horizon for US life insurers following the announcement by the National Association of Insurance Commissioners (NAIC) that it is to measure the financial impact of modernisation efforts proposed for solvency regulation.

Proposed regulation favours principles-based reserves (PBR) over the static formulas traditionally used to calculate the reserves.

“Our modernisation efforts promise to improve the accuracy with which regulators and companies match reserves to risk,” said Thomas R Sullivan, chairman of the NAIC Life Insurance and Annuities Committee, and Connecticut insurance commissioner.

The NAIC has selected actuarial consulting firm Towers Watson to work with state regulators and interested parties. They will examine PBR provisions of the proposals, calculate their impact on industry reserves and compare them to current methodologies.

Towers Watson was selected following a review of eight firms that responded to an NAIC request for proposal released on 29 July. The NAIC said Towers Watson was selected based on their experience, project approach and competitive price.

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