Excerpt: This article is a follow-up to my recent arti-cle on the principles-based reserves(PBR) movement in the life and healthinsurance industry. In it, I made the followingpoints:

Excerpt: Recently, the Principles Based Valuation approach (PBV) has enjoyed considerable support and momentum within the life and health insurance industry. Instead of prescribed methods, assumptions, and tables for statutory reserves, they would be computed based on actuarial judgment in accordance with standards of practice. A key requirement would be peer review of such reserves by another professional actuary, before reserves were officially released.

Excerpt: Throughout the life and health insurance industry, complaints about the product filing and forms approval process under state regulation have been increasing. In earlier years, new products were relatively infrequent. Now, however, new products often are introduced several times a year. The complexity of products is also increasing, including new versions such as: ? Multiple underwriting classes for life insurance ? Variable life and variable annuities ? Minimum death benefits on variable products ? Universal life, with or without secondary guarantees ? GICS ? Equity-indexed annuities ? Long-term care

Excerpt: For a considerable number of years the common denominator in discussions concerning the Actuarial Opinion Model Regulation (AOMR) has been controversy and complaints. These objections have been voiced by both regulators and industry.

Excerpt: Long-established state regulation for insurance companies started to come under fire in the early ?90s. Primary causes were insolvencies of several large life insurers. Congressman Dingell wrote a very critical report about inadequacies of the state structure. In response, the National Association of Insurance Commissioners worked to establish an accreditation system. In general, there was increased concern about passing more model bills faster and pushing for more uniform adoption of models across the 50 states.

Excerpt: Two controversial topics involving actuarial reserves have been pending for several years. One involves the type of actuarial opinion and attestation regarding reserves, often described as the ?Section 7 versus Section 8? issue. The second involves the question of whether the entire standard valuation law needs a complete revamping. Various industry committees and task forces from the ACLI and American Academy of Actuaries have been involved in studying these matters. The primary regulatory group has been the Life and Health Actuarial Task Force, but the NAIC?s A Committee has also articipated to some extent.

Excerpt: The field of worksite marketing is growing at a fairly significant pace. More insurance companies are entering the field, and competition for agents and brokers with experience in these types of sales is becoming more intense. Worksite marketing combines features of traditional group and individual lines of business.

Excerpt: Start with a clean slate and ?develop from scratch a completely new valuation law.? This was basically the charge from the NAIC?s Life and Health Actuarial Task Force to a new task force of the American Academy of Actuaries. This latter group has met to try to fulfill its charge. One goal is to prepare a complete draft of a new law by the June 1998 NAIC meeting.

Excerpt: Several years ago, the NAIC decided that it could no longer work with industry advisory groups because of concerns about the appearance of excessive closeness between regulators and the insurance industry. However, it soon became apparent that the NAIC, by itself, lacks the staff to complete the research on pending proposals. Therefore, a new trend developed, at least for areas involving actuarial issues. The NAIC started to turn more than ever to the American Academy of Actuaries for aid through task forces. Obviously, many Academy members work in the insurance industry for the same companies that previously provided advisory groups. However, the Academy also includes consultants, academics, and insurance department personnel.

Excerpt: 0ften, it seems that good or bad things come in threes. However, currently there are four primary regulatory developments that pose a threat to small company operations.

Excerpt: For several years, the insurance industry has been computing risk-based capital (RBC), that is, minimum statutory capital based on an in-force and asset mix. Companies are now fairly comfortable with the formula, even though it involves statistical concepts of square roots and covariances. The NAIC maintains a permanent regulatory working group that discusses its own and industry proposals for modification of the RBC formma.

Excerpt: The jury is still out on this question. There is no doubt that the entire health-care field and the future of private health insurance are radically changing. In 1994, a Society of Actuaries program was entitled ?The Small Company-Dinosaur of Healthcare Reform?? This phrasing implies a negative answer to the possibility of coping. The steadily declining number of small companies itself implies that there are ever fewer test cases to answer the question. Also in 1994, when the Clinton Health Bill was debated, our largest insurers supported the bill and appeared to commit to an environment in which any insurer could cope with managed care only as a government-appointed claims payer.

Excerpt: As usual, there was no lack of significant and, in some cases,controversial meetings and topics. I have summarized below those topics that are of most interest to me and my company. For purposes of this article, I have expanded the section on genetic testing.

Excerpt: The National Association of Insurance Commissioners (NAIC) covered a wide variety of items at its third quarter meeting, in Minneapolis. In outline form, the following summary describes some of the actions and conclusions:

Excerpt: Experts from outside the actuarial profession, including a regulator, hospital administrator and physician, will give their perspective on: ? Why health care costs so much ? Insurers' role in medical care management ? Relationships between treatment decisions and available coverage ? Appropriate use of underwriting ? Paying for uncompensated care

Excerpt: Estimating the need for surplus Capital budgeting Influence of rating agencies and regulators Providing for surplus needs Reinsurance Alternate financing Securitization Surplus notes Factoring commissions