Annual Meeting & Public Policy Forum to Be a Hybrid Event
Sessions to Look at Key Life Insurance Issues
Registration is open for the Academy’s 2021 Annual Meeting and Public Policy Forum, to be held as a hybrid event Nov. 4–5. Attendees will have the option to join us in person at the Fairmont Hotel in Washington, D.C., or virtually from your home or office.
The agenda will include practice-specific breakout sessions, with life breakouts providing:
- A look into index-linked annuities;
- Updates on emerging issues in life reinsurance; and
- A discussion of long-term care insurance from the life perspective.
Plenary sessions will cover cross-practice critical issues including COVID-19; diversity, equity & inclusion; insurance regulation at the state, federal, and international levels; and professionalism and ethical concerns relating to data analytics and artificial intelligence applications. All of these sessions will offer the opportunity to have a discussion directly with policymakers, subject-matter experts, and Academy leaders.
The Academy will also honor recipients of its annual service awards—the Jarvis Farley Service Award, Cande Olsen; the Robert J. Myers Public Service Award, Eli Donkar; and the Outstanding Volunteerism Awards, including Karen Rudolph.
The Academy is committed to following local health guidelines. We look forward to delivering a timely and topical event to you, and to seeing you in November. Register now for early registration savings.
Academy Holds Successful Virtual PBR Boot Camp: Registration Open Soon for Regulator-Focused Mini-PBR Seminar
The Academy held another successful multi-day Virtual PBR Boot Camp June 7–9.
Lankowski (bottom right) at a session on assets
Presentations covered a range of specifically tailored sessions relevant to the principle-based reserving (PBR) framework for life insurance (and variable annuities), including lessons learned through implementation of VM-20, mortality, liability assumption considerations, PBR life insurance asset modeling, reinsurance, model overview and model governance, variable annuities, and regulator and auditor reviews, among others.
While each session allowed attendees the ability to interact on the Boot Camp platform, the agenda also included interactive Q&A sessions driven by participants’ areas of interest, sharing insights, and learning from others’ experience of PBR in their practice.
“Our speakers were truly subject-matter experts who had done the modeling, followed governance procedures, and had been through PBR actuarial reviews, so had practical advice for participants,” said Linda Lankowski, a PBR Boot Camp presenter/moderator and chairperson of the PBR Strategy Subgroup.
“Judging from the number of questions posed by the attendees both during the sessions and at the end-of-day wrap-up session, the audience was engaged, active, and will apply the learnings in next year’s PBR reports,” she said.
Academy Resource: ‘PBR in Practice’ Webpage
Looking for a one-stop shop for your PBR-related resources? The Academy’s PBR in Practice webpage contains helpful materials to assist actuaries and regulators in their practice and oversight of PBR for life insurance and variable annuities, including a toolkit that provides resources.
Save the Date for ’PBR Boot Camp: The Regulatory Perspective‘
Mark your calendar for the Academy’s PBR Boot Camp: The Regulatory Perspective. During this compact seminar, to be held virtually on Oct. 13 from noon to 2 p.m. EDT, regulators will provide insights into their oversight and review of principle-based reserving (PBR) and share their perspectives on forthcoming public policy changes and other needed revisions, including amendments to the Valuation Manual. Registration will open this week.
Life Illustrations Work Group Updates Practice Note
The Life Illustrations Work Group updated the life insurance illustrations practice note to better reflect current practices actuaries are using when complying with ASOP No. 24, Compliance with the NAIC Life Insurance Illustrations Model Regulation, which was revised and adopted in December 2016.
Life Webinar Looks at Effects of COVID-19
The Academy’s May 25 Life Practice Council webinar, “The Impacts of COVID-19 on the Life Insurance Industry,” looked at the pandemic’s impacts on the life insurance industry and explored the possible near- and longer-term effects on life insurance. Panelists discussed the impact of COVID-19 on financial results, mortality experience, and considered possible impacts on life insurance operations including underwriting and pricing.
Presenters were Carmi Margalit, S&P Global Ratings; Carolyn Covington, SCOR Global Life Americas; and Catie Muccigrosso and Taylor Pickett, both with Reinsurance Group of America. Senior Life Fellow Nancy Bennett moderated. They discussed topics concerning 2020 financial results and observations, the impact of the novel coronavirus on mortality, and the overall impact of the pandemic on the underwriting process.
“With very few outliers, COVID-19 was a manageable earnings event,” Margalit said. Takeaways included:
- The impacts of COVID-19 on the life insurance industry are still being assessed, and we do not yet know the long-term effects.
- The industry has been adaptable in handling the immediate consequences, and certain markets, such as the bond market, were able to avoid a severe crash due to a quick fiscal and monetary stimulus.
- COVID-19 has led to visible impacts on death benefit payouts, with 2020 seeing a 16% increase in death benefits paid.
- Pandemic-related deaths are lower for the insured population compared to the general population.
- While there is reason for increased optimism, the pandemic is not yet over, and we will continue to see additional impacts on the industry and mortality rates from international exposure and international mortality. The industry did have enough capital buffers to navigate the impacts of COVID-19.
- Annuity sales declined in 2020 overall due to the operational factors of COVID-19, including access to new and existing consumers.
- We will have more knowledge regarding the final trajectory of the pandemic on mortality considerations closer to the third quarter; however, this could be impacted if new strains of the virus become prominent.
- Many tools exist to facilitate the underwriting process, and there is much variability within any given tool. Underwriting practices must adapt as a result of the impacts of COVID-19 and revised guidelines must be created.
Slides and audio are available free to Academy members.
Register for the Sept. 22 Life Policy Webinar
The Academy will host an “Academy Life Policy Update” webinar this week. Presenters will give a National Association of Insurance Commissioners (NAIC) Life Risk-Based Capital (RBC) update, an NAIC Life Actuarial Task Force (LATF) update and will discuss future mortality improvement. Presenters will be Philip Barlow, chair of the NAIC’s Life RBC Working Group; LATF Chair Michael Boerner; and Marianne Purushotham, a member of the Academy’s Life Experience Committee. Academy Life Vice President Laura Hanson will moderate. The webinar will be held on Wednesday, Sept. 22, from 12:30 p.m. to 2 p.m. EDT. Register today.
Life Practice Council, CPC Comment to NAIC Special Committee
Laura Hanson, vice president, life, and Lauren Cavanaugh, vice president, casualty, co-presented verbal comments to the NAIC’s Special (EX) Committee on Race and Insurance regarding proposed charges being considered by the committee. Their remarks addressed the special committee’s property/casualty and life workstreams concerns addressed in comment letters previously submitted by Academy President Tom Campbell in May.
Work Group Submits Draft VM Wording to LATF
The Annuity Reserves & Capital Work Group (ARCWG) released its proposed draft Valuation Manual (VM) wording for VM-22 principle-based reserving (PBR) for non-variable annuities. The draft reflects changes in association with the recommendations in the ARCWG predecessor Annuity Reserves Work Group-proposed VM-22 presentation, exposed by the VM-22 Subgroup in October 2020. Each section shows markups compared to existing VM-20 or VM-21 wording, which is included as a draft note at the beginning of each section. ARCWG submitted the document to LATF’s VM-22 Subgroup in late July.
Life Reserves Work Group Comments to LATF on VM
The Life Reserves Work Group submitted a comment letter to LATF on a VM amendment proposal form regarding asset adequacy testing for reinsurance requirements.
Work Group Comments on VM-22
The ARCWG submitted a comprehensive proposed draft of revised NAIC VM-22 associated with its October 2020 framework for a fixed annuity principle-based reserving (PBR) framework.
The document offers recommendations on VM-22 principles, requirements, and guidance, and asks for the NAIC VM-22 Subgroup’s consideration of the proposed language changes, as it moves toward inclusion of fixed annuities in the NAIC Valuation Manual.
Academy Interest Rate Generator Updated
The annual update to the Academy Interest Rate Generator (AIRG), which is currently used in some regulatory reserve and capital calculations, is now available. A corresponding frequently asked questions document has been updated to reflect changes for 2021. Read the Academy alert.
Register Today for November’s LHQ Seminar
Register now for the Academy’s 2021 Life and Health Qualifications Seminar, to be held in November outside of Washington, D.C. The highly regarded LHQ Seminar delivers the best, most efficient way to obtain any needed basic education or relevant CE 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. Register today.
Member Activity—Is Your Academy Member Profile Up to Date?
Collecting, maintaining, and analyzing various demographic information allows the Academy to better understand its membership specifically and the U.S actuarial profession in general. In recent years, the Academy has expanded the type of information requested and compiled, including allowing members to add another area of practice to their profile, ethnicity, and specializations within their practice area.
If you haven’t updated your member profile recently, please take a few minutes to make sure your information is current by visiting the “Update My Profile” section of the member section of the Academy website to review and add this optional additional information. If you need assistance in reviewing, updating, or adding specific demographic information to your Academy member profile, contact membership@actuary.org.
In This Issue
- Annual Meeting & Public Policy Forum (Hybrid Format) to Feature Sessions on Life Insurance Issues
- Academy Holds Successful Virtual PBR Boot Camp
- Save the Date for ’PBR Boot Camp: The Regulatory Perspective‘
- Life Illustrations Work Group Updates Practice Note
- Life Webinar Looks at Effects of COVID-19
- Register for the Sept. 22 Life Policy Webinar
- LPC, CPC Comment to NAIC Special Committee
- Work Group Submits Draft VM Wording to LATF
- Academy Interest Rate Generator Updated
- Register Today for November’s LHQ Seminar
- Member Activity
- Legislative/Regulatory Activity
- In the News
Legislative/Regulatory Activity
Following is a roundup of recent life-practice-related legislative and regulatory activity:
Federal Activity
U.S. Rep. Michael Burgess introduced the Group Term Life Insurance Increase Act (H.R. 195) to increase the limit on the amount of employer-provided group term life insurance that an employee may exclude from gross income for income tax purposes. Currently, an employee may exclude from gross income up to $50,000 of the cost of group term life insurance plus any amount paid by the employee for the purchase of that insurance. The bill would increase the $50,000 limit to $375,000 and adjusts the increased limit for inflation.
State Activity
Texas Gov. Greg Abbott signed H.B. 1777, amending the Texas Insurance Code to incorporate a “best interest” standard of care for annuities. Under prior law, there was disparity in the oversight of the sale of annuities, as variable annuities contain securities. This “best interest” standard for annuities is similar to the best interest standard of care for securities adopted by the Securities and Exchange Commission in 2019. Nebraska Gov. Pete Ricketts signed the similar Legislative Bill 22, as did North Dakota Gov. Doug Burgum, with House Bill No. 1160.
Colorado Gov. Jared Polis signed Senate Bill 21-169 on July 6 to restrict insurers’ use of external consumer data to prevent possible discriminatory practices. The bill requires insurers to demonstrate to the Colorado Insurance Commissioner that they have tested whether their use of external data sources, as well as algorithms and predictive models using those data sources, unfairly discriminates based on an individual’s race, color, national origin, religion, sex, or sexual orientation. Read the Academy alert.
Arkansas House Bill 1801 prohibits the change of a beneficiary of a life insurance policy through a will. The law specifies that the designated beneficiary of a life insurance policy can be changed according to the terms of the policy but not changed in a will, and any changes regarding beneficiaries are ineffective if not made according to the policy terms.
Oklahoma Gov. Kevin Stitt signed Enrolled Senate Bill 122. The legislation authorizes credit for reinsurance as either an asset or a reduction from liability on account of reinsurance if an insurer is domiciled and licensed or has its head office in a reciprocal jurisdiction, defined as a non-U.S. jurisdiction that is subject to an in-force, covered agreement with the United States. The measure requires the insurance commissioner to publish a list of these reciprocal jurisdictions “through the National Association of Insurance Commissioners (NAIC) Committee Process.”
Louisiana Gov. John Bel Edwards signed House Bill No. 703 into law, prohibiting insurers from using genetic information and genetic testing for life and long-term care insurance underwriting purposes. The act generally prohibits insurers that offer life and long-term care insurance policies from considering an individual’s “participation in genetic research” when making underwriting decisions. This is intended to prevent possible discrimination on behalf of insurers when underwriting individuals or families.
Senior Life Fellow Nancy Bennett comments were featured in ThinkAdvisor in an article exploring possible implications of reported life expectancy changes due to the COVID-19 pandemic.
Bennett provided an actuarial perspective for a Forbes Advisor article on commercial space travel and its effect on life insurance.
A subscriber-only Life Annuity Specialist story on the potential use of oral care data in underwriting quoted Sue Bartholf, chairperson of the Life Underwriting and Risk Classification Work Group, on adding new data elements to the underwriting process.
A Daily Progress (Charlottesville, Va.) financial planning column cited results from the Actuaries Longevity Illustrator, jointly sponsored by the Academy and the Society of Actuaries.