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Evaluating the Implementation and Industry Impact of Principle-Based Reserves - Request for Proposals

Background and Purpose

The implementation of Principle-Based Reserves (PBR) marks a significant advancement in life insurance regulation, offering insurers a more accurate and risk-sensitive approach to reserving. While many companies have already adopted PBR and are beginning to realize its benefits, others—particularly those that previously qualified for a PBR exemption—face a more complex decision. The technical demands, resource requirements, and operational changes associated with PBR can pose substantial challenges, especially for smaller insurers or for larger organizations whose life and annuity line of business are insignificant driver of revenue.

This research is both timely and essential. It aims to inform insurers and regulators about the current state of PBR implementation and to support those companies that were previously exempt but are now considering adoption. PBR adoption has occurred in phases, beginning with life insurance contracts (VM-20) and variable annuity contracts (VM-21). The next phase requires adoption for non-variable annuity contracts issued on or after January 1, 2026, as outlined in Section 22 (VM-22) of the NAIC Valuation Manual. By examining the experiences, challenges, and lessons learned from insurers that have already implemented PBR, this study will provide practical insights and guidance. These findings can help insurers make more informed decisions regarding adoption strategies and potential pitfalls—contributing to a more consistent and effective application of PBR across the industry.

Research Objective

The Society of Actuaries Research Institute is seeking researchers to conduct a comprehensive study on the implementation and impact of Principle-Based Reserves (PBR) across the life insurance and annuity industry. This research should explore the current state of PBR adoption, particularly among large life insurers or any life insurers that have implemented PBR for life contracts (vm-20) and variable annuity contracts (vm-21) and provide insights that can support small or exempt insurers considering adoption. The following are examples of proposed topics that may be addressed:

  • What is the current adoption status of PBR across the industry?
  • What are the typical implementation timelines, costs, and resource requirements?
  • What challenges have insurers faced, and what strategies have proven effective in overcoming them?
  • What PBR modeling and valuation tools are commonly used by life insurers, and what challenges have they encountered when transitioning platforms due to PBR requirements?
  • How have regulators evaluated the effectiveness of PBR, and what updates are anticipated?
  • What refinements have been made to PBR models and methodologies after Jan 1st 2020?
  • What is Regulatory view on how the PBR is moving and what common pitfalls the regulator sees in the industry?

The research is anticipated to include both qualitative and quantitative components, such as:

  • A survey of life insurers that have implemented PBRto gather practical insights on implementation experiences, including model validation, regulatory compliance and operational impacts. In addition, please also include these into final survey report:
    • Segmentation by Company Type or Size
      Include breakdowns by company size (e.g., small vs. large insurers), ownership structure (mutual vs. stock), or product focus (life vs. annuity vs. combo)
    • Technology and Modeling Infrastructure
      Report on the types of modeling platforms and actuarial software used (e.g., MG-ALFA, AXIS, Prophet), and whether companies had to upgrade or replace systems to comply with PBR.
    • Governance and Controls

Include insights into how companies are managing model governance, validation, and documentation under PBR—especially in light of VM-20 and VM-21 requirements.

  • Staffing and Resource Impacts

Highlight whether companies had to hire or retain staff, or rely on external consultants, to meet PBR requirements.

  • Future Outlook

Ask respondents about anticipated changes or enhancements to their PBR processes over the next

1–3 years, including readiness for VM-22 if applicable.

 

  • A regulatory perspective studyto assess how PBR is meeting its intended goals and to identify any planned updates to the Valuation Manual or related processes.

Expected Deliverables

  • A detailed written report summarizing the results from the survey, including PBR implementation status (including but not limited to % of life insurers and annuity companies that implemented PBR, reasons for exemption requested, etc.), common challenges, implementation timelines, key financial impacts, and recommendations for insurers and regulators.
  • Presentation materials suitable for use at SOA-sponsored events, including meetings, webcasts, or podcasts.

Note that the list above is not meant to be exhaustive but merely examples of relevant topics that may be researched.

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

  1. Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  2. An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and limitations of the analysis. In particular, include a section detailing the survey design, sample size, response rate, limitations or caveats in interpreting the results, approaches you plan to use to identify companies that have implemented PBR, regulators and specific contacts for this project. Please provide samples of survey questions. Please comment on mitigation plans that could be used for low- or non-participation for the survey.
  3. A description of the expected deliverables and any supporting data, tools or other resources to be used.
  4. Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.

As a guide for developing project budgets, please review the Historical Project Cost Guide (see Appendix).

Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.

  1. A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The SOA is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
  2. Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The SOA will appoint a Project Oversight Group (POG) to oversee the project. The POG is responsible for recommending to the Section Research Committee the proposal to be funded, if any. Input from other knowledgeable individuals also may be sought, but the Section Research Committee will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to research-ML@soa.org with the subject line: Evaluating the Implementation and Industry Impact of Principle-Based Reserves (PBR).

Notification of Intent to Submit Proposal

If you intend to submit a proposal, please email written notification by September 5, 2025 to research-ML@soa.org with the subject line:  Evaluating the Implementation and Industry Impact of Principle-Based Reserves (PBR).

Submission of Proposal

Please email your proposal to research-ML@soa.org with the subject line: Evaluating the Implementation and Industry Impact of Principle-Based Reserves (PBR); proposals must be received no later than September 19, 2025.

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the Society of Actuaries in publicizing or promoting the research and responding to media requests.

The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Conflict of Interest

You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries or the Society of Actuaries Research Institute.

Appendix

The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.

All Contracted Projects

This category includes all contracted projects that the Institute has undertaken within the last several years. The 33rd – 66th percentile project costs range is $25,000 – $50,000.

Literature Reviews

This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review. The 33rd – 66th percentile project costs range is $15,000 – $20,000.

Surveys

This category includes all projects that had a survey as their primary component. The 33rd-66th percentile project costs range is $28,000 – $55,000.