The American Council of Life Insurers’ (ACLI) President and CEO Dirk Kempthorne issued the following statement today on principle-based reserves (PBR):

Washington, D.C., (June 10, 2016)  —  “With official acceptance today by the National Association of Insurance Commissioners (NAIC), a modernized method for calculating life insurers’ reserves will become operational on January 1, 2017, in 45 states where it has been adopted.

“ACLI strongly supports this modernized method, known as ‘principle-based reserves’ or ‘PBR,’ which has been under development for more than 10 years. The National Association of Insurance Commissioners (NAIC) has played a leadership role in updating the reserving methodology, which dates to the nation’s Civil War. NAIC first outlined this important initiative following a public hearing in the summer of 2005 and approved model legislation in 2009.

“PBR will enhance the current system for calculating policy reserves resulting in reserve levels that more accurately reflect risks assumed by life insurers for the policies they underwrite.

“PBR also will strengthen solvency oversight authority of regulators to help ensure companies will be able to fulfill their promises to policyholders. Ultimately, PBR’s modernized reserve methodology will enable companies to develop innovative life insurance products and services that help consumers address their ever-changing financial needs.”