Washington — In a letter to National Association of Insurance Commissioners (NAIC) President Sandy Praeger, the American Council of Life Insurers (ACLI) is advocating revisions to the current reserving system.
The letter, signed by ACLI president and CEO Frank Keating, says that economic turmoil has forced life insurers to find new ways to conserve and attract capital. “In some situations, our current reserving system and risk-based capital systems are simply too conservative, which has the effect of reducing stated capital positions,” the letter states.
Keating contends these requirements have become particularly onerous in light of the current credit crisis.
“For certain products, existing conservative reserving requirements have led life insurers to look to the capital markets for reserve relief in order to provide products to consumers that reflect more appropriate reserve levels,” the letter says. “With the current market disruptions, however, these capital markets solutions have virtually disappeared or become unavailable to many companies, and this having an impact on some balance sheets.”
Source: National Association of Insurance Commissioners
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