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Old 08-05-2019, 06:45 PM
DonnaClaire DonnaClaire is offline
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Default LATF & LTC/HATF NAIC Update - NY Aug 1-2 2019

LATF and LTC/HATF NAIC Update – New York August 1-2, 2019
By Donna R. Claire

The Summer LATF/LTC/HATF meetings were held in New York, NY (Great city, lots of great restaurants, shows, museums and lots of people.)

Below are highlights of the meetings I attended:


GRET: Dale Hall and Leon Langlitz gave an overview of the SOA work on the Generally Recognized Expense Table factors that can be used by the Illustration Actuaries. Other than the niche marketing, the rates were about the same as last year. In general, 25%-30% of the companies use GRET factors for at least one product. The proposed GRET factors were exposed for 30 days.

VM-22 Report: Ben Slutsker (new chair of the Academy’s Annuity Reserve Work Group) and John Miller (Vice chair of the Academy group) gave an update on the Academy group. They have determined that now was a good time to have a major focus on the fixed annuities PBR, given that the life and variable annuities PBR have settled down. The hope is that this can get done by 1/1/2022. They are framing the goals, with one objective being to combine products having consistency with other similar products.

Standard Valuation Law Interest Rate Group: Chris Conrad gave the Academy update on the work on valuation interest rates for non-variable annuities. This group is re-visiting the non-level SPIA valuation rates among other products, and will work with the Annuity Reserve Work Group. They are targeting a 1/1/2022 date for implementation.

VM-22/23 Report: John Robinson (MN) gave an update on the work being done on non-variable annuities. He is focusing on the new VM-22 valuation rates with respect to various products, particularly with regard to reinvestment rates and the lumpy payouts on products like structured settlements.

Longevity Risk: Rhonda Ahrens (NE) chairs the LATF group on this. They are following the longevity risk work of the Academy group, headed by Paul Navratil. The Academy proposed an RBC C2 risk factor, limited to payout annuities. Also they recommended that a covariance correlation factor regarding mortality risk be added after the Academy proposes a new life mortality risk factor. The regulators had asked some follow-up questions, such as the level of underlying reserves (e.g., do reserves cover 85% of the risk?).

Variable Annuities Capital and Reserve Report: Pete Weber (OH) discussed possible next projects assuming that the VM-21 (variable annuities) changes are adopted by the NAIC at this meeting. The group will likely stay around to provide answers to changes that might not be clear to all Companies and potentially clean up confusing wording in VM-21.

IUL Illustration Subgroup Report: Fred Andersen (MN) gave an update on work of this group as to whether AG49 should be modified. They discussed illustrated scale, with the concern being that riskier products (i.e., a multiplier feature) may show better illustrated numbers without making the risk clear. Another concern is that unexpected lapses may occur if the credited rates do not match illustrated rates. Art Panighetti and Scott Harrison represented an industry group that sells IUL; they are willing to look at possible guardrails to limit the “arms race” in developing risky products that would illustrate best. Birny Birnbaum, an NAIC funded consumer representative, pointed out problems with these riskier contracts, since the asset charges are not included in the basis of the general illustration; he would like the IUL products with multipliers to be ended. (It was a heated discussion.) Fred decided that the next discussion would be 30 days from now, focusing on (1) whether the multipliers/extra charges IUL should be allowed to be illustrate better and (2) should the 145% disciplined current scale factor apply to charges supporting bonuses/multipliers?

Adoption of the LATF Experience Reporting Subgroup Report (VM-50): Fred Andersen (MN) chairs the LATF subgroup on this topic. They are debating when to do a Variable Annuity study – do it now when the stock market has gone up or wait until some decreases. Separately Pat Allison (NAIC) stated that 176 companies were selected to provide data under VM-50.

Accelerated Underwriting: Mary Bahna-Nolan (chair of the AAA/SOA Life Experience Committee) presented an APF which would require that Accelerated Underwriting details be included under VM-51. This was exposed for 60 days.

Mortality Aggregation: Pat Allison (NAIC) and Rachel Hemphill (CA) discussed mortality aggregation in PBR. They had a slide deck that walked through examples of the top-down and bottom-up approaches. The slide deck was exposed for comment for 45 days.

Consider Adoption/Exposure of Valuation Manual Amendment: One Amendment proposal was adopted (AG VAED) to allow early use of the new Variable Annuities rules (VM21).

Compact (IIPRC): Katie Campbell (NAIC) provided an update on the work of the Interstate Insurance Product Regulation Commission. As of 2019 they have gotten 861 filings (200 more than last year), mostly on the 2017 CSO life insurance; the average turnaround time is 33 working days. The product standards committee works on uniform standards, e.g., group annuities; they have also recently worked on over-loan provisions and are starting work on GICs. Everything is posted on the IIPRC website (

International Insurance Developments: Josh Windsor (NAIC) gave an update on international developments. There are internationally agreed insurance core principles, which apply to all insurers. The international insurance work is ongoing.

YRT Field Test: Jason Kehrberg (chair of the Academy’s Life Valuation Committee) gave an update on a proposed field test to measure the impact of various alternatives to determine how YRT reinsurance should be handled under PBR. Up to now, Companies have interpreted how to do YRT reinsurance differently, resulting in widely different results. As a stopgap measure effectively ˝ cx is being used. Pat Allison (NAIC) summarized the proposed testing methods.

Conversion Mortality: Len Mangini (chair of the Academy’s Life Reserve Work Group) gave an update on an eventual proposal for the Valuation Manual regarding how term and group conversions should be treated.

An Update on SOA Research and Education: Dale Hall (S0A) gave an update on SOA Research. There is a report on a new pension mortality table called Pri 2012. There are different mortality by collar color, age, sex and income. There are a number SOA studies going on, e.g. on accelerated underwriting.

PBR Resources from the Academy’s Life Practice Council: Donna Claire, chair of the Academy’s PBR Governance Committee, gave an update on various activities the Academy’s Life Practice Council has undertaken regarding PBR. The goal is to provide assistance to the regulators and practicing actuaries with regard to implementation and review of PBR. One of the items mentioned is one more possible 2˝ day PBR Boot Camp, given in December 2019 right after the NAIC meeting in Austin if enough interest is shown. This boot camp is for people who have not yet implemented PBR, as well as those who have but want to do it better, as well as regulators.

Professionalism: Shawna Ackerman (President of the Academy), Kathy Riley (ASB) and Godfrey Perrott (chair of the ABCD) gave reports. Godfrey talks about discipline cases on the Academy page. Kathy reviewed ASoPs: she mentioned the modeling work being done; another proposed ASoP is on assumptions. There are also reviews being done on ASoP 22 (opinions on asset adequacy analysis), ASoP 2 (non-guaranteed elements) and ASoP 11 (reinsurance).

LONG TERM CARE: Perry Kupferman (CA) chairs

Academy Update: Warren Jones and Bob Yee gave an update on the Academy’ LTC projects. There is a draft Practice Note on the combination Life/LTC products that should be available this year. Bob Yee also gave a presentation on LTC Valuation work.

SOA on LTC Research & Combination LTC Product: Dale Hall (SOA) and Steve Schoonveld gave an update on the work on the hybrid product. (Some of these will be discussed in the Senior Issues sections.) They have similar benefits to other LTC riders, but are attached to life insurance and have guaranteed premiums. These products are becoming more popular. One problem is that the experience has not yet emerged.

LTC Pricing Report: Paul Lombardo (CT) gave a report of the regulatory LTC pricing group. An issue is that some states use state data vs. others that use national data; so there is a disconnect.

LTC Valuation Report: Fred Andersen (MN) gave a report of the regulatory LTC valuation group. They have reviewed AG51 reports for 50 companies with the largest LTC exposures. Most used the 2012 IAR table. This year they are looking at older age morbidity assumptions. Some of the trends are length of claims are longer than assumed. They have also seen lower younger age, but steeper older age, morbidity. Next they are looking at identifying the range of morbidity assumptions – can companies justify them? The morbidity improvement has been varied, e.g. 1% for 10 years vs. 2% for 20 years, and they are still looking at this.


Adoption of Minutes: The NAIC Medicare Supplement Insurance Model Regulation Compliance Manual was adopted and sent to their parent committee.

Report of the Health Care Reform Actuarial (B) Work Group: The group itself has not met. There were representatives from the Federal Center for Consumer Information and Insurance Oversight (CCIIO) who gave a report. They released the Qualified Health Plans rate changes on August 1. The risk adjustments, which are budget neutral within a state, were also released August 1.

LTC: Perry Kupferman (CA) gave an update on the LTC meeting above.

Professionalism (Academy): This report was similar to the one given to the Life Actuarial Task Force (see above), but with a health emphasis. It was given by Shawna Ackerman, Kathy Riley and Godfrey Perrott. Godfrey gave an update on the ABCD regarding public discipline (less than 50 cases were publicly disciplined). Kathy mentioned the Modeling and Assumptions proposed ASoPs. In December 2019, they may adopt the Modeling ASoP; the Assumptions ASoP will wait until at least 2020. ASoP 28 (Actuarial Opinion on Health Liab/Assets) is under review; ASoP 3 (CCRC) is also being reviewed and ASoP 18 on LTC is expected to be reviewed shortly.

Academy Health Practice Council: Barb Klever (Academy) said the Council has been active in a number of areas. The Council recently completed visits to federal agencies. They have given presentations regarding ACA. The Academy has worked with the SOA on the Group Life Waiver of Premium Reserves. A LTC product Practice Note was released; one has until September 2 if one wants to comment on this note.

SOA on Health Research: Dale Hall (SOA) gave a general update on health research being done by the SOA. Dale showed the per member per month trends – the individual markets went up noticeably in 2014-2015 due to ACA; pharmacy is was 29% average cost increase over the past 4 years.


The next NAIC LATF/LTC/HATF meeting in December 2019 in Austin. Stay tuned!
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Old 08-06-2019, 10:35 AM
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campbell campbell is offline
Mary Pat Campbell
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Thanks for the update.... I didn't realize it had been in NYC - I could've gone!

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Old 08-09-2019, 05:54 PM
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Mary Pat Campbell
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From the Academy:

A few of the links from that:
SVL presentation:

letter re: accelerated underwriting & experience:

Academy PBR resources:

Longevity risk:

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Old 08-13-2019, 02:05 PM
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Ultimate Anyone? Ultimate Anyone? is offline
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Thanks Donna!
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