July 06, 2016
Contact: Richard Loconte, 212-709-1691
DFS TO ADOPT PRINCIPLE-BASED RESERVING FOR LIFE INSURERS IN 2018
The department will seek input on establishing appropriate safeguards.
Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) will adopt principle-based reserving (PBR) for its regulated life insurers beginning in January 2018 and has convened a working group representing industry and consumers to assist DFS in establishing the necessary reserve safeguards.
“The adoption of principle-based reserving in New York will keep the state at the forefront of insurance regulation,” said Financial Services Superintendent Maria T. Vullo. “DFS will continue to make certain that New York’s insurance market is fiscally safe and sound and that the reserves to back insurance policies are appropriately set to protect consumers.”
The action aligns with regulatory standards adopted by 45 states, representing nearly 80 percent of the U.S. life insurance market. New York has a long history of robust solvency safeguards, protecting consumers and being a leader in insurance regulation. Consistently with this history, the Superintendent has established a working group consisting of six domestic life insurers and consumer representatives with deep roots in New York, representing the business and geographic diversity of the state, to provide input to DFS in setting the appropriate reserving safeguards to ensure that New York State continues to have the most robust solvency protections in the U.S. The working group will assist in developing the minimum reserve floor for all products sold to consumers, regardless of company experience.
The members of the working group are:
- Mark Pearson, Chairman & CEO – AXA Equitable Life Insurance Company
- Deanna Mulligan, President & CEO – The Guardian Life Insurance Company of America
- Maria R. Morris, Executive Vice President, Global Employee Benefits – Metropolitan Life Insurance Company
- Ted Mathas, Chairman & CEO – New York Life Insurance Company
- Bruce W. Boyea, Chairman, President & CEO – Security Mutual Life Insurance Company of New York
- Roger W. Ferguson, Jr., President & CEO – Teachers Insurance & Annuity Association of America (TIAA)
- Birny Birnbaum, Executive Director – Center for Economic Justice
- Kristen McManus, Senior Program Specialist, Advocacy - AARP
PBR is designed to allow companies to hold reserves based on credible experience that is more closely tailored to the companies’ particular products, within the strict guidelines that will be set by DFS for New York. The 2018 target implementation date will allow DFS to continue to engage with other state regulators as part of the National Association of Insurance Commissioners’ effort to implement PBR, properly calibrate its components to safeguard industry solvency and to ensure regulatory uniformity across the United States.