NAIC: Life Insurance Revamp Arriving
Association prepares to implement principle-based reserving

WASHINGTON, D.C. (June 10, 2016) —The National Association of Insurance Commissioners (NAIC) adopted a recommendation today that will activate principle-based reserving (PBR) starting on Jan. 1, 2017. The recommendation from the PBR Implementation Task Force follows an extensive analysis of amended Standard Valuation Laws passed by 45 states, representing nearly 80 percent of the U.S life insurance market. 

"This is an historic accomplishment for the state-based system of insurance regulation that marks the beginning of a new policy valuation system that can adapt to new and innovative life insurance products benefiting consumers and life insurers," said John M. Huff, NAIC President and Missouri Insurance Director. "For many years, life insurers and insurance regulators contended with an outdated formulaic based system that was challenged to keep pace with consumer demands for new life insurance products, while providing life insurers with reasonable valuation guidance for ensuring financial soundness."

Developing a principle-based approach to life insurers' reserving methods has been an NAIC priority in recent years. PBR is designed to maintain strong solvency oversight by regulators while helping ensure that companies will fulfill obligations to policyholders.

 "The work of the NAIC to modernize our life industry's valuation system demonstrates the states are capable of working together to make regulatory changes when it makes sense for the life insurance marketplace and consumers," said NAIC Vice President Julie Mix McPeak, who also serves as Tennessee Insurance Commissioner and PBR Implementation Task Force co-chair. "This endeavor has been underway for a long time and many people are to be commended for their tireless efforts and contributions."

The NAIC's PBR Implementation Task Force is finalizing important work before implementation. This includes refining the PBR methodology, managing the pilot actuarial surveillance project, developing regulatory review and analysis procedures, developing additional training materials and working on experience data collection and review.

"Life insurance products have become more intricate in recent years," said NAIC Secretary-Treasurer Eric A. Cioppa, who serves as Maine Insurance Superintendent and PBR Implementation Task Force co-chair. "This innovation within our system applies a 'right-size' approach to reserving for life insurance policies by allowing life insurers to use their own policy experience. This revamp will also foster more competition to help create more affordable life insurance products for consumers."

About the NAIC

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit

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