Affordable Life Insurance Alliance says FIO should support new valuation model

Feb 03, 2012

AFIA said the FIO should support a new valuation model.

The Federal Insurance Office has a chance to support a change in the valuation for the best, in the opinion of Affordable Life Insurance Alliance, according to A.M. Best Company. The ALIA said when the FIO issues its report, it should support adopting a law that would shift the system toward helping "principles-based reserving."

"We believe that the current system for valuing life insurance reserves is antiquated and badly in need of reform," ALIA executive director Scott Harrison told the news source. "The current system has been around since World War II and needs to be modernized significantly."

Harrison said the NAIC should adopt a model that would let the current solvency modernization law be adopted by most states, which would allow the law to be updated to address new products without having to have a new legal process each time. He said this would benefit consumers and allow companies to develop products that would meet customer needs more easily.

A study by LIMRA shows that there are 35 million under-insured middle market households. Any changes in the laws to make life insurance more flexible could help those who do not have coverage obtain a policy.

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