Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Life
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions



Reply
 
Thread Tools Search this Thread Display Modes
  #1  
Old 08-07-2017, 07:22 PM
DonnaClaire DonnaClaire is offline
Member
 
Join Date: Apr 2005
Posts: 63
Default LATF, PBR and HATF NAIC Update – Philadelphia August 4-5, 2017

LATF, PBR and HATF NAIC Update – Philadelphia August 4-5, 2017
By Donna R. Claire


The Summer 2017 LATF meeting was held in Philadelphia, PA. (Nice city – not the greatest one to drive around though – lots of traffic.)

Below are highlights of the meetings I attended:


LIFE ACTUARIAL TASK FORCE MEETING: Chaired by Mike Boerner (TX)
Mortality Data Elements Request: Mary Bahna-Nolan (SOA/AAA Experience Chair). The experience from companies using accelerated underwriting varies widely. She therefore has suggested that additional data requests would be asked so data can be better analyzed. Mary also mentioned the need to get data from simplified/guaranteed underwriting. These comments are for Fred Andersen’s experience group to consider adding data fields for future mortality collection. The data elements request was exposed for comment for 90 days.

Accelerated Underwriting: Accelerated underwriting blurs the line between non-med and med underwriting. Experience from accelerated underwriting is just emerging. The SOA will be doing a Delphi Study regarding the effectiveness of various accelerated underwriting techniques. This information is not going to be available before the decision needed to change the Valuation Manual for 2019. A possibility for a short-term solution is to develop a guidance note/interpretations/list of potential topic questions for regulators to ask if a company is using accelerated underwriting. Matt Monson is a member of the VM-20 Reserving Subgroup, whose goals and focus is to identify areas where additional guidance is needed. He walked through a possible interpretation paper on margins. There will be a LATF conference call on the process and possible alternatives regarding how accelerated underwriting would be used in PBR reserving shortly.

Adoption of the LATF Experience Reporting Subgroup Report: Fred Andersen (MN) chairs:
He gave an update on this group. There is a plan for the work MIB has been doing will likely be transitioned to the NAIC, with the target date of wrapping the transition up by the summer of 2019.

SOA Research, Education and Implementation Update: Dale Hall (SOA) gave an update on SOA activities. Regarding mortality, looking at the U.S. Population Mortality Rate report from 2000-2015, there is a noticeable slowing of mortality improvement. Another report the SOA did was a survey of the industry of Actuarial Model Governance. A third item was the Relative Risk Tool – more companies are using this (there are now 400 user accounts).

Guaranteed Issue: Mary Bahna-Nolan, chair of the joint Academy/SOA task force on guaranteed issue and pre-need mortality spoke. For the basic, there is a 5 year Select and Ultimate table; for the valuation table it was recommended there only be an ultimate table. The valuation table is on a uni-smoke/composite basis only. The loading is the same as the 2017 CSO (about 17%, differing by age). This covers 99% of the exposures, but 55% of the companies. The definition of GI means that anyone in an eligible group within specified ages would be accepted; this would not allow any work-site marketing or acceptance based on health-related questions. For guaranteed issue the tables have been exposed by LATF. No comments were received during the exposure period, but one was received afterward stating that the GI table rates were too low for final expense products. The AAA/SOA group developed an APF needed for the Valuation Manual. The APF states that the GI (including GI term) be treated similar to whole life under PBR. The group recommended that the table also be used for nonforfeiture. This APF was exposed for comment for 45 days; it is acknowledged that the definition of GI may need to be tightened to handle the possible final expense issue, where the numbers may not provide high enough reserves. The report on GI is finalized and available on the SOA website.

Simplified Issue Mortality: Mary Bahn-Nolan also chairs the joint SOA/Academy group on simplified issue. The recommendation for the basic table is to have a 10 year select and ultimate; the valuation table is ultimate only. It is on a unismoke basis only. The loading is about 20%, which covered 94.9% of contributing companies and 71.4% by exposure. The proposal is that nonforfeiture also be based on this table. This is for the more traditional simplified issue business; the definition of SI for the purposes of this table was for small face amount which typically asked a few medical questions and is either accept/reject. It is not simplified underwriting, which may call for more health/discretionary follow-ups. The full SI report is complete and is ready for exposure. It is noted that the new SI tables would increase reserves for this business. LATF exposed this for 45 days for comment.

GRET (Generally Recogninzed Expensed Table): Dale Hall and Leon Langlitz (chair of the SOA’s Committee on Life Insurance Expenses): The new GRET factors were developed. This is the 26th year of the GRET factor recommendations from the group. A survey of companies showed about 30% of the companies use GRET in their life illustrations. LATF exposed the GRET report for 30 days.

Adoption of Spreads and Default Rates: Larry Bruning (NAIC) gave an update on the spread report. Spreads declined slightly from the last report. These were exposed for comment for 14 days.

Consider Adoption/Exposure of Valuation Manual Amendments: A number of proposed amendments were discussed:
a) There were a number of changes needed to incorporate the new VM-22 (minimum valuation interest rates for SPIAs) that had been exposed for comments; this was adopted by LATF.
b) The amendment clarified that it is the unloaded 2017 CSO table that is supposed to be used when determining whether the ULSG is non-material. This was adopted by LATF.
c) Another amendment clarified that it is the amount of claims, not number, when looking at experience. This was adopted by LATF.
d) There were a number of clarifying edits that were adopted without objection by LATF.
e) There was an amendment to move a number of definitions to the VM-01 section of the Valuation Manual from other sections. These were exposed for 21 days.
f) Some definitions that, in addition to being moved to VM-01, had some enhancements. These were exposed for 30 days.
g) There were some other word changes in a few areas. These were relatively minor, so were exposed for 21 days.

Consider Responses to Valuation Manual Questions: Reggie Mazyck (NAIC) gave an update on the VM Review Group’s proposed responses to questions raised on the Valuation Manual. These answers are supposed to be straightforward answers based on the current wording of the VM. These were exposed for comment for 60 days. Another item is that they are looking for guidance as to where these questions and answers should be placed that all may see it.

Discuss Model Validation and the Economic Scenario Generator: Larry Bruning (NAIC) gave an update on this. He discussed how the NAIC group developed a standard portfolio of assets and liabilities that could be used to validate a company model. The NAIC is looking at some regulatory volunteers to sign up to brainstorm on economic scenarios. For example, a question could be whether there should be one generator or calibration techniques used instead.

Update on Experience Reporting Data Collection: Larry Bruning (NAIC) gave an update on this. The NAIC completed beta testing on their ability to collect data. This will be discussed at the NAIC’s Executive Committee to move forward on the NAIC becoming the statistical agent.

International Issues: Josh Windsor (NAIC) gave a report on international issues. There are solvency-related Initiatives Currently in Process. Initially this will affect multi-country companies such as AIG, MetLife and Allianz. However, some of the requirements that may come out of this may eventually be used by others such as ratings agencies. Two major views on valuation are Market Adjusted Valuation and GAAP with Adjustments. Right now, the MAV has 3 options: (1) a Blended rate if assets and liabilities are closely matched; (2) High Quality Assets (3) Own Assets with Guardrails. Capital requirements aim to covering a 1 in 200 event over 1 year.

Compact (IIPRC): Jeanne DeHarsh and Kathy Maclava provided an update on the work of the Interstate Insurance Product Regulation Commission. This is an interstate commission that can be used for certain life, annuity and LTC product filings. They have updated standards on LTC. The product standards get reviewed on a 5 year cycle– e.g. graded premium WL is one that was reviewed and will be up for approval later in this NAIC meeting. The group did get their first LTC rate increase filing this year. Everything is posted on the IIPRC website (www.insurancecompact.org). As of now, 215 companies are registered to file, there have been over 500 product forms submitted in 2017; average turnaround time is 26 days; 45 states are members of the Compaq. Most filings were for life insurance. Most 2017 CSO were for term and ULSG.

Annuity Nonforfeiture: Tomasz Serbinowski (UT) heads a NAIC group to review the prospective test for deferred annuities (Model 805). This group has met twice. They have been looking through old NAIC proceedings to determine why the prospective test was developed before moving on to changes needed.

Mike Boerner discussed that the A committee is also interested in whether Model 805 needs updating.

VM-22 Subgroup Report: John Robinson (MN) is the new LATF chair of the VM 22 subgroup now that Felix Schirripa(NJ) retired. He gave an update of the LATF VM-22 (general account annuities) subgroup. The rates for the new valuation for SPIA are working their way through the NAIC process.

There is an Academy group, lead by John Miller and Chris Olechowski, is working on the non-variable annuity PBR product. John gave an update. The current thinking is to have products have an exclusion test: pass - use current rules; fail - use AG-43 type rules. Products that fail would likely be those that have a lot of optionality such as guaranteed withdrawal benefits and enhanced income benefits.

Chris Conrad gave a presentation on another product being worked on by the Academy group: to develop an updated non-SPIA valuation interest rate approach. They want to bring in consideration of Guaranteed Living Benefits.

Longevity Risk: Rhonda Ahrens (NE) has taken over as chair of this group with Felix Schirripa’s retirement. This group has met twice. They are following the work on the Academy group, headed by Tricia Matson, on longevity risk. (Tricia will be giving a presentation to the RBC group later in the NAIC meeting).

Status Report on the RBC C-3 Phase 2/AG 43 Subgroup: Pete Weber (OH) gave an update from the RBC C-3 Phase 2/AG 43 subgroup on the implementing a new variable annuity framework in RBC C-3 Phase 2/AG43. Oliver Wyman had done studies of 15 companies. There is a second quantitative impact study being completed; a third study is to be kicked off in September. So – no final recommendations yet.

Professionalism: Mary Miller (past-President of the Academy), Mary Ellen Coggins (chair of the Actuarial Standard Board) and Janet Carstens (chair of the Actuarial Board for Counseling and Discipline Committee) gave reports. Mary Ellen highlighted new ASOP drafts. For example, the exposure draft on PBR is expected to come before the Life ASB Board in September; there is a draft on Life Products pricing in the works. Janet gave an update on the ABCD; so far in 2017 there were 26 cases in progress; (most are pension). In addition, there were 54 requests for guidance.

September 2017 PBR: Donna Claire chair of the Academy’s PBR Governance Committee (me!) gave an update. The next PBR Boot Camp will be September 11-13 in Las Vegas. It will be regulatory/”auditor” focus. This seminar is a great way to get caught up on PBR; it has been revised to concentrate on people who will be reviewing, as opposed to doing, PBR. There are a number of new sessions. For example, there is one where Larry Bruning (NAIC) will discuss the NAIC developments of experience reporting; another where two company people and an auditor will discuss doing PBR and the issues found; a third session will have Mike Boerner and Rhonda Ahrens give an update on regulatory changes that are being worked on for 2018 and 2019. So, if you are a regulator, work with regulators, or will “audit” PBR either as a consultant or as company chief actuary or other company reviewer, this seminar is for you. The registration for this meeting is available on the Academy website [www.actuary.org/content/pbr-fall-boot-camp]. See the list of some of the leading PBR experts within the professions in addition to the regulatory speakers. Hope to see you there!




PBA REVIEW (EX) WORKING GROUP: Mike Boerner (TX) Chairs

The various groups reported.

There is a subgroup on PBR Reporting Review Procedures. Pete Weber (OH) leads this group looking at the Financial Condition Examiners Handbook. Changes are exposed for comment until August 15.

Mike Boerner gave an update on the PBR Blanks and Handbook changes. There were a few tweaks in the last month, but they are close to final.

Larry Bruning (NAIC) gave an update on Experience Reporting needed under VM-50/51. The NAIC has completed beta testing of data on 20 million data records. They have demonstrated this to the ACLI, SOA and regulators and gotten feedback. The next step is to test in production mode. The target date is to have everything ready by 1/1/2020, since many companies will be under PBR by 2020.

Larry’s NAIC group is there to support the state regulators. He gave a report on sensitivity testing of term model reserves under PBR. He walked through an example of this, showing the impact of various sensitivities; e.g., decreasing gross premiums 15% obviously increased reserves, as does the sensitivity increases in mortality or expenses.

I also gave a summary of the PBR Boot Camp – 2˝ intensive days on everything you wanted to know about PBR, with the next one being September 11-13 in Las Vegas (more details under the LATF meeting above).


LONG TERM CARE (HATF subgroup): Perry Kupferman (CA) Chair

Update on Academy’s LTC Activities: Laurel Tasker gave an update on Academy activities, which include working with a Medicaid group. There is lapse subgroup who is working on lapses by various items – age, sex, etc., and expect to have a report in a year.

LTC Pricing Subgroup: Jan Graeber(TX), chair of this group, gave an update on their work: They have had 6 conference calls discussing rate increase considerations. Work is still progressing. One possible goal is to have more uniformity between the states regarding how rate increases are reviewed.

LTC Valuation Subgroup: Perry Kupferman, chair of this group, gave an update on their work: They had a regulator only call to review the Loss Development Form (Part 3 in the Annual Statement). There were some companies which had significant increases in claim reserves; it gives the domestic regulator a chance to figure out which of their companies were outliers. Perry also discussed findings from the California letter; some companies are using long term interest rates of up to 6%; some used rates of around 4%. In terms of assuming rate increases in asset adequacy testing, around half assume no rate increases, others assumed rate increases of up to 60%.

PBR and LTC: Fred Anderson (MN) gave an update on this. The PBR Valuation Manual (VM-25) is on LTC. Right now it refers to the Health Manual. They think AG-LTC may provide much of the needed information. This is being explored. One issue is whether there should be mandatory reporting of LTC items in VM-51.

SOA LTC Research: Dale Hall (SOA) gave an update on this, The SOA has a Think Tank Product Innovation Research Project on LTC A couple of ideas is combine life insurance and LTC or to combine retirement plans with LTC [Personal Note: some companies are doing something similar to this already] Tax issues need to be considered. Work is continuing.


HATF: Kevin Dyke (MI) Chairs
Professionalism: Mary Miller (past-President of the Academy) Mary Ellen Coggins (chair of the Actuarial Standard Board) and Janet Carstens (chair of the Actuarial Board for Counseling and Discipline Committee) gave reports similar to those given at LATF, but with a health slant. Mary Ellen highlighted certain ASB, including new drafts. For example, the revision of ASoP 42 on Health and Disability Assets and Liabilities other than Liabilities for Incurred Claims has a comment deadline of September 30.

Academy Health Practice Council Work: Sheri Westerfield gave an update on this Council. They have participated with congressional people and have released papers regarding ACA and the related proposed regulations.

SOA Health Research: Dale Hall (SOA) gave an update on health issues the SOA is/has been working on. One issue they worked on was Medicaid margins needed in different markets. They have also released a model on LTC trend modeling. The SOA will be looking at trends in health care claims.

Health Care Reform Working Group: David Shea, chair, gave a report on what has been going on with respect to Cost Share Reduction agreements under ACA. They have a draft on what to consider depending on what will happen with Cost Share Reduction. Some states have moved ahead in asking companies to assume CSR in their rate filing; others have told companies not to include CSR in their rate filings; other states have asked companies to do both; other states have been silent on this issue. Companies and regulators are doing the best they can.


NEXT MEETING

The next NAIC LATF meeting is in Honolulu in December 2017. Stay tuned!
Reply With Quote
  #2  
Old 08-07-2017, 07:52 PM
JMO's Avatar
JMO JMO is offline
Carol Marler
Non-Actuary
 
Join Date: Sep 2001
Location: Back home again in Indiana
Studying for Nothing actuarial.
Posts: 37,613
Default

Quote:
Annuity Nonforfeiture: Tomasz Serbinowski (UT) heads a NAIC group to review the prospective test for deferred annuities (Model 805). This group has met twice. They have been looking through old NAIC proceedings to determine why the prospective test was developed before moving on to changes needed.

Mike Boerner discussed that the A committee is also interested in whether Model 805 needs updating.
As I recall, the prospective method was used to comply with IRS views.
And, have the Annuity non-forfeiture laws been updated since 1980s? I know it was being looked at back then.
__________________
Carol Marler, "Just My Opinion"

Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Apr 5, 2018.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
All purpose response for careers forum:
Quote:
Originally Posted by DoctorNo View Post
Depends upon the employer and the situation.
Quote:
Originally Posted by Sredni Vashtar View Post
I feel like ERM is 90% buzzwords, and that the underlying agenda is to make sure at least one of your Corporate Officers is not dumb.
Reply With Quote
  #3  
Old 08-07-2017, 09:56 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 84,626
Blog Entries: 6
Default

Quote:
Discuss Model Validation and the Economic Scenario Generator: Larry Bruning (NAIC) gave an update on this. He discussed how the NAIC group developed a standard portfolio of assets and liabilities that could be used to validate a company model. The NAIC is looking at some regulatory volunteers to sign up to brainstorm on economic scenarios. For example, a question could be whether there should be one generator or calibration techniques used instead.
.... wait, what?

What exactly is the ESG that got transferred to the SOA being used for, then? Did it ever get approved to be used for anything?
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #4  
Old 08-08-2017, 08:54 AM
California's Avatar
California California is offline
Member
 
Join Date: Aug 2005
Posts: 467
Default NAIC summary

http://www.naic.org/meetings1708/cmt...?1502193029688

I add this for comparison to the excellent one Donna provides. Later when the full minutes are added, greater detail is available.
Reply With Quote
  #5  
Old 08-08-2017, 05:14 PM
Take 2's Avatar
Take 2 Take 2 is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: second estate
Favorite beer: Hires Root
Posts: 5,065
Cool SNFLIDA Prospective perspective

Quote:
Originally Posted by JMO View Post
As I recall, the prospective method was used to comply with IRS views.
And, have the Annuity non-forfeiture laws been updated since 1980s? I know it was being looked at back then.
Before the prospective test, guaranteed spike bonuses commonly boosted cash values in the 10th year if there were no prior surrenders or withdrawals. Some felt that this was unfair to people who needed their money in the 9th year, i.e., who surrendered without any part of the 10th year bonus. The prospective test was created to guarantee that 9th-year (and 8th- ,...) surrenders received an "equitable" share of the 10th year guarantee.

Annuity nonforfeiture was updated in the early 1990s to allow an extra 1/2% reduction in the guaranteed accumulation rate for indexed annuities. This was due to the need to invest in derivatives to support the indexing. However, nothing was done to address potential problems with the prospective test.

http://www.actuarialoutpost.com/actu...d.php?t=315169
__________________
there is no situation so bad that
getting upset won't make it worse
Reply With Quote
  #6  
Old 08-08-2017, 07:30 PM
JMO's Avatar
JMO JMO is offline
Carol Marler
Non-Actuary
 
Join Date: Sep 2001
Location: Back home again in Indiana
Studying for Nothing actuarial.
Posts: 37,613
Default

Thanks, Take2. I am really out of touch with these things, now that I'm no longer an annuity actuary. Or any kind of actuary.
__________________
Carol Marler, "Just My Opinion"

Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Apr 5, 2018.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
All purpose response for careers forum:
Quote:
Originally Posted by DoctorNo View Post
Depends upon the employer and the situation.
Quote:
Originally Posted by Sredni Vashtar View Post
I feel like ERM is 90% buzzwords, and that the underlying agenda is to make sure at least one of your Corporate Officers is not dumb.
Reply With Quote
  #7  
Old 08-09-2017, 08:51 AM
California's Avatar
California California is offline
Member
 
Join Date: Aug 2005
Posts: 467
Default NAIC Principle-based Reserving Implementation (Ex) Task Force

http://www.naic.org/meetings1708/cmt...?1502279217669

2. Adopted the report of its PBR Review (EX) Working Group, which included the following action:
a. Adopted proposed changes to the Financial Condition Examiners Handbook for consideration by the Financial Examiners Handbook (E) Working Group.
b. Heard an update from NAIC staff about the status of principle-based reserving (PBR) revisions to the blanks, the Financial Analysis Handbook and the Financial Condition Examiners Handbook.
c. Heard an update from NAIC staff on company experience reporting.
d. Received a report on the sensitivity testing of term model reserves.

3. Received an update on the Life Actuarial (A) Task Force’s PBR-related work, which included the following action:
a. Adopted revisions to the Valuation Manual (VM) companywide exemption.
b. Adopted revisions to the timing for calculation of quarterly VM-20, Requirements for Principle-Based Reserves for Life Products, and investment spread tables.
c. Adopted the proposal for the VM-22, Maximum Valuation Interest Rates for Income Annuities, to make the valuation interest rate for income annuities more responsive to the economic environment.
d. Adopted the proposal requiring the 2017 Commissioners’ Standard Ordinary (CSO) when calculating the net premium reserve (NPR) in the actuarial method.
e. Adopted revisions to VM-31, PBR Actuarial Report Requirements for Business Subject to a Principle-Based Reserve Valuation.
f. Adopted the VM-20 default cost tables updated using data through December 2016.
g. Adopted a revision to the VM to point to VM-22 for the minimum requirements for fixed annuity contract valuation interest rates.
Reply With Quote
  #8  
Old 08-10-2017, 11:33 AM
Actuary321 Actuary321 is offline
Member
 
Join Date: Sep 2001
Posts: 27,734
Default

Quote:
Originally Posted by JMO View Post
Thanks, Take2. I am really out of touch with these things, now that I'm no longer an annuity actuary. Or any kind of actuary.
Don't sell yourself short. You are a retired actuary. I imagine that is the happiest kind.
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 03:34 PM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.64854 seconds with 9 queries