Life Perspectives, Summer 2020

Summer 2020
Vol 3 | No. 3

Registration Open for September’s Virtual PBR Boot Camp

Registration is open for the Academy’s Virtual PBR Boot Camp, to be held Sept. 14–17. Sessions over four days will provide useful and practical information for those at all levels of familiarity with PBR (principle-based reserving) methodologies and reserve requirements in a virtual platform that will enable all to attend safely and still have opportunities for live engagement.

Participants will benefit from the depth of experience of the presenters for this highly regarded seminar and will have the opportunity to earn valuable continuing education credit.

Topics include life insurance and implementation of VM-20; overviews on PBR life insurance assets; reinsurance; variable annuities; and regulator and auditor reviews and updates.

See the full agenda and register on the Virtual PBR Boot Camp webpage.

LPC Seeks Feedback on VM-20 Practice Note

The Life Practice Council (LPC) is seeking input on possible items for inclusion in an addendum to the VM-20 Practice Note. The LPC would like input on: What additional questions should be answered? What other topics would be helpful? Are there questions in the current practice note where the answers should be expanded? Feedback is welcome at life@actuary.org.

VM-21 Checklist Released

The Variable Annuity Reserves and Capital Work Group released the VM-21 Checklist. This checklist provides a comprehensive guide to VM-21, which specifies requirements for principle-based reserves for variable annuity contracts.

The VM-21 Checklist is a companion piece to the PBR Checklist, released in October 2019.

Academy Presents at NAIC Summer Virtual National Meeting

Several Academy presentations were made to the NAIC’s Life Actuarial (A) Task Force (LATF) at NAIC’s Virtual Summer 2020 National Meeting in early August.

Immediate Past President Shawna Ackerman, Actuarial Standards Board (ASB) Chairperson Kathy Riley, and Actuarial Board for Counseling and Discipline (ABCD) member Godfrey Perrott gave professionalism briefings to LATF and other NAIC practice-area task forces, including highlights of recent and upcoming Academy and ASB and ABCD activity, including the upcoming professionalism webinar, “In Times of Uncertainty, Professionalism is Certain,” to be held on Aug. 20.

The Academy presented an update of the Yearly Renewable Term (YRT) Field Test led by the Life Practice Council’s (LPC) Jason Kehrberg, and an update from Annuity Reserves Work Group Chairperson Ben Slutsker and Vice Chairperson John Miller.

Other LPC presentations included:

Life Experience Committee

The Life Experience Committee Mortality Improvement Subgroup presented an update on the 2020 Life MI Scale Recommendation.

PBR Work Group

The PBR Implementation Work Group provided an update on Academy PBR Resources.

Additional Academy Life Comments to NAIC

Several Academy life comments were made to the NAIC in the past few months.

Actuarial Perspectives on Accelerated Underwriting

The Life Underwriting and Risk Classification Work Group gave a presentation on actuarial perspectives on accelerated underwriting to the NAIC Accelerated Underwriting (A) Working Group.

Life Underwriting

The Life Underwriting and Risk Classification Work Group sent a follow-up letter to the NAIC Accelerated Underwriting (A) Working Group on Actuarial Standards of Practice (ASOPs) that were referenced in the work group’s June 18 presentation.

AG 49

The Life Illustrations Work Group sent a letter to the NAIC’s IUL Illustration (A) Subgroup regarding an exposed proposal from the American Council of Life Insurers on how to treat IUL illustrations under Actuarial Guideline XLIX (AG 49).

PBR

The Annuity Reserves Work Group provided an update to the NAIC VM-22 (A) Subgroup on the preliminary framework elements for fixed annuity principle-based reserving (PBR).

Illustrations

The Life Illustrations Work Group sent a comment letter to the NAIC’s Life Actuarial (A) Task Force (LATF) on the “independent proposal.”

C-2 Longevity Factors

The C-2 Longevity Risk Work Group sent a comment letter and supplemental materials to the NAIC Life Risk-Based Capital Working Group on C-2 Longevity Factors.

Tax Comments

The Tax Work Group submitted a comment letter to the Internal Revenue Service (IRS) regarding a proposed regulation that provides guidance on the computation of life insurance reserves for income tax reporting.

IUL Comments

The Life Illustrations Work Group sent a comment letter to the NAIC Life Actuarial (A) Task Force regarding the illustrations of Indexed Universal Life (IUL) insurance policies under Actuarial Guideline XLIX (AG 49) and the redline of AG 49A.

Fixed-Annuity PBR

The Annuity Reserves Work Group gave an update to the NAIC VM-22 (A) Subgroup on the preliminary framework elements for fixed annuity PBR.

Annual Meeting & Public Policy Forum—Life Breakout Sessions Set

Registration is open for the Academy’s 2020 Annual Meeting and Public Policy Forum, scheduled for Nov. 5–6 in Washington, D.C. The agenda will cover a number of topics relevant to life actuaries, plus the opportunity to hear insights on the November elections from presidential historian Michael Beschloss and political analyst Charlie Cook during their keynote speeches. The life practice breakout sessions have been set and early registration runs through the end of August—register today.

Life Breakout Sessions

Below is a summary of life breakout sessions—visit our website to see full descriptions.

Implications of the SECURE Act—Experts will discuss the implications of the Setting Every Community Up for Retirement Enhancement (SECURE) Act on the life insurance industry and its impact on defined contribution plans and annuities.

Regulation Best Interest and Annuity Suitability Model—In recent years, the Securities and Exchange Commission, the National Association of Insurance Commissioners, and the New York State Department of Financial Services have adopted new or revised regulations. Experts will discuss their implications on the life insurance industry and the role of the actuary in complying with the changes.

Effects of COVID-19 on the Life Insurance Industry—Speakers will focus on the potential financial impacts and ways that the life insurance industry will need to adapt in the post-pandemic environment.

Register Today for the 2020 LHQ Seminar

The Academy’s Life and Health Qualifications Seminar delivers the highest-quality and most efficient way to obtain any needed basic education or relevant continuing education credit necessary to qualify to issue actuarial opinions for either the NAIC Life and Accident & Health (A&H) Annual Statement or the NAIC Health Annual Statement. The seminar will be held Nov. 9–12, in Arlington, Va.—register today.

Legislative/Regulatory Update

Following is a roundup of recent life-practice-related federal and state legislative and regulatory activity:

The U.S. Securities and Exchange Commission (SEC) published a final rule on May 1 adopting rule and form amendments intended to help investors make informed investment decisions regarding variable annuity and variable life insurance contracts.

Georgia Gov. Brian Kemp signed a bill into law July 2 regarding the Georgia Life and Health Insurance Guaranty Association, providing that annuity contracts and certificates are included in certain coverage provisions. Kemp signed another bill into law on the same date providing the incorporation of the NAIC’s reinsurance model law into the Georgia Insurance Code.

Florida Gov. Ron DeSantis signed a bill into law July 1 that prohibits life insurers and long-term care insurers from canceling, limiting, or denying coverage, or establishing differentials in premium rates, based on genetic information.

Mississippi Gov. Tate Reeves signed a bill into law on June 22 that mandates certain requirements for credit for reinsurance relating to certain life insurance policies with guaranteed non-level gross premiums or benefits as well as universal life insurance policies with provisions resulting in the ability of a policyholder to keep policy in force over a secondary guarantee period.

Arizona Gov. Doug Ducey signed a bill into law June 5 revising certain provisions of Arizona Revised Statutes related to life insurance including that insurers reimburse implementation credits to the policyholder, or provide appropriate disclosure of the implementation credits in the group policy.

Maryland Gov. Larry Hogan signed a bill into law on May 8 making several revisions to the state’s Life and Health Insurance Guaranty Corporation Act, including prohibiting coverage from being provided under the act for certain structured settlement annuity benefits and requiring member insurers to be and remain members of the corporation as a condition of their authority to transact certain business in the state. Hogan signed another bill into law on the same date requiring certain insurers to send a written notice to policyholders of universal or variable life insurance if the policy contains a provision that allows the policyholder to reduce the face amount of the policy.