US life insurers’ reserve requirements could soon be eased if a
call in this regard made by the American Council of Life Insurers
(ACLI) in November last year is accepted by the National
Association of Insurance Commissioners (NAIC), the body
representing all US state insurance regulators.
Changes proposed by the ACLI cover four broad areas:
• Reserve and capital requirements for variable annuities with
• Reserves for certain life insurance products;
• Capital requirements for commercial mortgages held by
insurance companies; and
• Accounting for deferred taxes.
“ACLI has submitted a proposal for the NAIC’s consideration that
would bring flexibility to the current system of calculating
reserves, which is overly conservative and sets standards that are
above and beyond what is reasonably needed for insurers to meet
their obligations,” said the ACLI’s president and CEO Frank Keating
in a statement.
Commenting on the ACLI’s proposals the NAIC’s president Roger
Sevigny stressed: “While many of the ACLI’s requests have been
under consideration by insurance regulators for quite some time, I
can assure that careful deliberation will be exercised before any
action is taken.”
Sevigny added that no changes would be made that negatively
impact consumer protection measures, a possibility that has raised
the ire of a number of bodies including the Consumer Federation of
“State regulators should be ashamed of themselves for putting
industry interests so far ahead of the interests of consumers,”
said the CFA’s director of insurance and former Texas insurance
commissioner J Robert Hunter.
Underpinning this view was Joseph Belth, professor emeritus of
insurance in the Kelley School of Business at Indiana
“In the midst of the current financial crisis, it is unseemly
even to discuss the idea of weakening the conservative statutory
accounting rules that have long been in place for insurance
companies,” he wrote in a letter to the NAIC.
The NAIC will hold a public hearing to discuss the ACLI’s
proposals on 27 January. Debate will no doubt be heated.