Insurance Principle-based Reserving

Insurance Principle-based Reserving

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Reserving methods for life insurance companies are undergoing significant change in the United States, starting in January 2017. This alert highlights key implications associated with the change. Insurers should be examining potential impacts and adjusting their projects and processes, as appropriate

The National Association of Insurance Commissioners has successfully completed a long, multiyear process that will result in states implementation of a Standard Valuation Law (SVL) allowing life insurers to move away from a standardized reserving formula. The new reserving requirement is a Principle-Based Reserving method that aligns reserves more toward the risk profile of an individual insurer. The SVL provides for a detailed Valuation Manual that is on track to become effective January 1, 2017 now that 45 states with over 79 percent of written premium have adopted substantially similar terms and provisions.

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