Regulatory Resource for Actuaries: Life & Annuity
General Information Sources
Last reviewed: 7/27/18
General Information Sources
Actuarial Standards Board – Actuarial Standards of Practice (ASOPs)
The Actuarial Standards Board (ASB) establishes and improves standards of actuarial practice. These Actuarial Standards of Practice (ASOPs) identify what the actuary should consider, document, and disclose when performing an actuarial assignment. The ASB’s goal is to set standards for appropriate practice for the United States.
ASOP Discussion Drafts
This link is to ASOP Discussion drafts. Discussion Drafts are released as an initial step in seeking comments on changes to existing or creation of new standards of practice.
ASOP Exposure Drafts
ASOP exposure drafts. Exposure drafts are released by AAA for feedback from actuarial community after obtaining Actuarial Standards Board (ASB) and legal reviews.
The link is to the current ASOPs which may be found on the Actuarial Standards Board website. The list can be filtered to display
Life ASOPs and
American Academy of Actuaries (AAA)
The American Academy of Actuaries is a professional association whose mission is to serve the public and the U.S. actuarial profession. The Academy assists public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries credentialed by one or more of the five U.S.-based actuarial organizations in the United States.
American Academy of Actuaries Life Practice Council Committees
The Life Practice Council oversees the Academy's public policy work on life insurance issues. This link provides an overview of the various committees and groups which support the Life Practice Council's mission. The following are examples of interest to the Life & Annuity community:
- Life Capital Adequacy Committee
Addresses issues related to life and annuity risk-based capital (RBC) requirements.
- Life Experience Committee
Interfaces with work groups of the Society of Actuaries (SOA) regarding experience studies.
- Life Financial Reporting Committee
Responsible for topics related to life insurance financial reporting matters, focusing primarily on Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
- Life Products Committee
Focuses on emerging issues in product development including pricing, underwriting, and disclosures.
- Life Valuation Committee
Addresses topics related to the valuation of life insurance and annuity products, focusing primarily on statutory valuation techniques.
- Lifetime Income Risk Joint Task Force
Reviews and evaluates the risks and related issues of inadequate guaranteed lifetime income among retirees
Stress Testing Work Group
Evaluates the use of stress testing in the calculation of reserves and capital.
- Tax Work Group
Provides insights on tax issues related to life and annuity products
American Academy of Actuaries - Life Practice Notes
U.S. Qualification Standards
Practice notes provide guidance to actuaries on various issues such as product development, market conduct, valuation, capital management, and risk management.
This document describes the standards U.S. actuaries are required to meet (by virtue of the Code of Professional Conduct) to issue Statements of Actuarial Opinion when rendering Actuarial Services.
Regulations & Legislation
The FIO was established by the Dodd-Frank Act which granted the FIO certain financial stability, monitoring, and international responsibilities. It advises the Secretary of the Treasury (Secretary) on major domestic and prudential international insurance policy
issues and serving as a non-voting member on the Financial Stability Oversight Council (FSOC).
Department of Labor Fiduciary Rule - Final
Regulation defining who is a fiduciary of an employee benefit plan under ERISA as a result of giving investment advice to a plan, its participants or beneficiaries. This new rule also defines applicability for IRAs. The rule treats persons who provide investment advice for a fee as a fiduciary in a
wider array of advice relationships.
Department of Labor Fiduciary Rule – Fifth Circuit Court of
The Fifth Circuit Court of Appeals denied requests made by California, New York, and Oregon, as well as the American Association of Retired Persons (AARP), to intervene in the litigation challenging the Department of Labor’s (DOL) Fiduciary Rule. As a result, the Fifth Circuit Court’s ruling on
March 15, 2018 that the DOL exceeded its statutory authority stands and the fiduciary rule will become invalid. The DOL had until June 13, 2018 to appeal the Circuit Court’s decision to the United States Supreme Court. The full text of the decision can be found at this page.
Securities and Exchange
Commission - Regulation Best Interest Proposed Rule
The SEC is proposing a new rule under the Securities Exchange Act of 1934 establishing a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail
customer. The comment period for this new rule is open until August 7, 2018. The proposed rule can be found at this page.
IFRS Standards are set by the International Accounting Standards Board and are used primarily by publically accountable companies—those listed on a stock exchange and by financial institutions, such as banks. A full listing of Standards can be found at this page, along with links
to the unaccompanied Standards.
Latest Life Insurance
The Australian Prudential Regulation Authority (APRA) oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies and most members of the superannuation industry.
The APRA web page contains news and regulatory requirements.
Capital Adequacy Test
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada. OSFI has issue the final version of the Life Insurance Capital Adequacy Test (LICAT) guideline.
guidelines on IFRS9 (Accounting)
OSFI’s latest guidelines on IFRS9 (Accounting) provide application guidance to Federally Regulated Entities (FREs) applying International Financial Reporting Standard 9 Financial Instruments (IFRS 9), and is effective when IFRS 9 is applicable to FREs.
Latest Life Insurance Prudential Standards
The Australian Prudential Regulation Authority (APRA) oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies and most members of the superannuation industry. The APRA web page contains news and regulatory requirements.
The New Zealand Society of Actuaries web site includes professional standards.
Interstate Insurance Product Regulatory Commission
Uniform Product Standards
Individual and Group Life and Individual Annuity product standards for the purpose of approval of policy forms, riders, and applications in 40+ states. Also contains IIPRC operating procedure information.
IIPRC Pending standards under development or existing standard in the process of being reviewed.
Filing CSO Mortality Table Updates with the IIPRC
Information on how to file 2017 CSO Mortality table changes to previously approved life insurance plans with the IIPRC. Contains additional links to product standard, checklists, and best practices.
Insurance Product Regulatory Commission
The IIPRC adopts product standards for Annuity and Life Insurance products. Product standards for Annuity and Life Insurance products
Association of Insurance Commissioners (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 members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Committees, Task Forces, & Working Groups
Life Insurance and Annuities (A) Committee
Life Actuarial Task Force (LATF)
Financial Condition (E) Committee
Financial Regulation Standards and Accreditation (F) Committee
This link provides a summary and links to the individual web pages of the committees, task forces, and working groups which makeup the NAIC and carry out its functions. Each individual web page contains information such as meeting materials, exposure drafts, and related documents. The following are examples
of interest to the Life & Annuity community:
The NAIC creates Model Laws in an effort to promote uniformity across the industry. States individually enact insurance laws, which are generally the NAIC's Models Laws in their entirety or with changes.
Regulations & Legislation
California 2017 Actuarial
Memorandum and Executive Summary
Provides filing instructions and requirements associated with California's Actuarial Memorandum and Regulatory Asset Adequacy Issues Summary documents.
Academy of Actuaries –State Scan
Legislative bill summaries and status on key topics for all 50 states.
Department of Insurance
Provides instruction to Life / Health companies that choose to depart from NAIC accounting practices and procedures.
York State Department of Financial Services financial reporting and reserve
valuation requirements for life companies, including the annual Special
Forms and instructions provided to domestic life insurance companies and domestic fraternal benefit organizations for required filings according to §4217 and §4516.
York PBR Legislation
The bill would incorporate the "Valuation Manual" Adopted By The NAIC on June 8, 2015, November 22, 2015, April 6, 2016, and August 22, 2016.
York State Department of Financial Services – Insurance Regulation 210
NYDFS Rule establishing standards for the determination and any readjustment for non-guaranteed elements that may vary at the insurer’s discretion for life insurance policies and annuity contracts.
New York DFS - Suitability and Best Interests in Life
Insurance and Annuity Transactions
The new Regulation 187 requires insurers to establish standards and procedures to supervise recommendations by agents and brokers to consumers with respect to life insurance policies and annuity contracts issued in New York State so any transaction is in the best
interest of the consumer and appropriately addresses the insurance needs and financial objectives of the consumer at the time of the transaction.
The National Conference of Insurance Legislators (NCOIL)
NCOIL helps legislators make informed decisions on insurance issues that affect policyholders and monitor federal / state authority under the McCarran-Ferguson Act.
Code, Regulations, and Official Guidance
US federal taxation is addressed within the Internal Revenue Code (IRC). As not all tax issues can be definitively addressed by the IRC, tax regulation is also shaped by other sources such as Treasury regulations, revenue rulings, and court cases. This webpage provides general links to
the IRC (Title 26 of the U.S. Code), Treasury regulations, and other official tax guidance maintained by the Internal Revenue Service (IRS).
Income Taxation of Life Insurance Companies
Life insurance companies (see
IRC §816 for definition of life insurance company) receive favorable federal income tax treatment. This link provides relevant sections of the IRC to determine the Life Insurance Company Taxable Income (LICTI) for federal income tax purposes. Of particular note to actuaries is
IRC §807, defining tax reserves. A life insurance company would also be subject to the
general provisions of the IRC for insurance companies (e.g., "DAC Tax" under IRC §848).
IRC §72: Taxation of
Annuities & Certain Proceeds of Endowment and Life Insurance Contracts
This section of the IRC describes the portions of annuity, endowment, and life insurance contracts includible in gross income for federal income tax purposes.
IRC §7702: Definition of
To receive favorable tax treatment, a life insurance policy must meet the definition of Life Insurance as specified in IRC §7702. Policyholders generally make the reasonable assumption that life insurance contracts purchased from an insurer will be treated as life insurance
for tax purposes—insurers (and their actuaries) should be diligent in designing their products to comply with federal income taxation definitions of life insurance.
IRC §7702A: Definition
Modified Endowment Contract
A life insurance policy meeting the definition of life insurance under IRC §7702 (see above) is considered a Modified Endowment Contract if it satisfies the definition in IRC §7702A. While Modified Endowment Contracts still receive
favorable tax treatment, certain limitation and penalties may apply (see IRC §72).
IRC §7702B: Treatment of Qualified Long-Term Care Insurance
A Qualified Long-Term Care Insurance Contract does not pay or reimburse expenses incurred for services or items reimbursable under the SSA or reimbursable but for the deductible or coinsurance amount, is guaranteed renewable, does not provide cash surrender value or other money that can be paid, assigned, or pledged as collateral for a loan, or borrowed and meets other requirements.
and Jobs Act
This law amends the Internal Revenue Code (IRC) to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.
U.S. Generally Accepted Accounting Principles (US GAAP)
The Securities Exchange Act of 1934 granted the Securities and Exchange Commission (SEC) authority to promulgate financial accounting standards for non-governmental entities. The Financial Accounting Standards Board (FASB) was eventually created and
designated by the SEC as the organization responsible for establishing and maintaining these accounting standards (US GAAP). In addition to FASB pronouncements, rules and interpretative releases of the SEC are also sources of authoritative GAAP for SEC registrants.
Codification (ASC) Topic 944: Insurance
The Accounting Standards Codification (ASC) is the source of authoritative Generally Accepted Accounting Principles (GAAP) recognized by the Financial Accounting Standards Board (FASB). Topic 944 covers insurance and replaces the Statements of Financial Accounting Standards (e.g., SFAS 60, SFAS 97, SFAS 120, etc.) previously promulgated by FASB
(pre-codification). The ASC can be viewed at this link for free by registering for the Basic View.
This page provides information on the current projects being undertaken by the Financial Accounting Standards Board (FASB), including an agenda of current projects, active exposure drafts, discussion papers, and other project documents.
Capital Adequacy Assessment for Insurers - Seeking Comments
Discussion Draft document which contains potential language that could be included in a future ASOP regarding Capital Adequacy Assessment for Insurers.
to Life and Fraternal RBC Factors and Instructions
The NAIC Life Risk-Based Capital (E) Working Group exposed for comment until 6/5/2018 changes to Life and Fraternal RBC factors and instructions to address changes necessitated for the implementation of the Tax Cuts and Jobs Act.
Group Capital Calculations
The charge of the Working Group is to construct a U.S. group capital calculation using an RBC aggregation methodology; liaise as necessary with the ComFrame Development and Analysis (G) Working Group on international capital developments and consider group capital
developments by the Federal Reserve Board, both of which may help inform the construction of a U.S. group capital calculation.
Standards for Life Insurance Required Capital Levels - Seeking Comments
Discussion Draft document which contains a proposal for an ASOP associated with current regulatory work on capital levels for life insurance products.
Tax Reform Changes to
Life RBC Proposal
The life and fraternal RBC formulas are tax-affected and are currently based on the tax code prior to the reform adopted in December 2017. This proposal adjusts factors and instructions that were based upon the previous tax environment to reflect the current environment.
IAA IFRS 17 Resource Page
The International Actuarial Association (IAA) is preparing materials to support IAA member associations and actuaries worldwide with the application and implementation of IFRS 17.
The IASB issues IFRS 17
The International Accounting Standards Board (IASB) has issued IFRS 17, global guidelines that require insurance companies to report specific information about the insurance contracts issued and the reinsurance contracts held. IFRS 17 will significantly impact insurer operations, including more transparency on
returns and risk. IFRS 17 is effective for annual periods beginning on or after 1 January 2021. The following links are to
documents and a
webinar on the subject.
IFRS17 Insurance Contracts Accounting - Project Page
The page includes information on recent exposure drafts, Board deliberations, discussion papers, and Educational materials. The IASB is expecting to publish a new IFRS Standard for insurance contracts in early 2017(IFRS 17 Insurance
Contracts) to replace IFRS 4 Insurance Contracts on January 1, 2021 and establish a comprehensive Standard for insurance contracts.
Transition Resource Group for Insurance Contracts
The Transition Resource Group (TRG) for IFRS 17 Insurance Contracts is one of the ways the Board is supporting implementation of the new Standard. The members of the TRG include financial-statement preparers and auditors with both practice and direct
knowledge of implementing IFRS 17. This site includes information about the TRG, materials from meetings held, and other resources for IFRS 17.
Current and historical federal and other interest rates
Composite Corporate Bond Rates
Composite Corporate Bond Rate Table published by the IRS
Federal Reserve System Historical Interest Rates
The H.15 release contains daily interest rates for selected U.S. Treasury and private money market and capital market instruments. It is published weekly.
Federal Reserve System Data Download
This link is to capability to download historical interest rate data maintained by the Federal Reserve System.
Historical Valuation, Tax, and Nonforfeiture Interest Rates
Current and historical valuation and non-forfeiture interest rates based on the dynamically determined formula from valuation law.
IRS Monthly Interest Rate Updates
Interest rate tables managed by the IRS.
VM-20 Spreads & Defaults
VM-20 Default Costs
VM-22 Daily Corporate
Standards of Practice (ASOP) 52- Principle-Based Reserves for Life Products
under the NAIC Valuation Manual
This standard applies to actuaries when performing actuarial services on behalf of life insurance companies, including fraternal benefit societies, in connection with the calculation or review of reserves for life insurance policies subject to “VM-20: Requirements for Principle-Based Reserves for Life Products” in the
Valuation Manual (VM-20).
Independent Review of Principle-Based Valuations - Seeking Comments
Discussion Draft document which contains a proposal for an ASOP associated with current regulatory work on principle-based reserves review opinions.
PBR in Practice AAA Resource Page
The Academy has assembled materials to assist actuaries and regulators as the U.S. moves into the implementation phase of PBR for life insurance.
PBR Checklist Subgroup of the Life Practice Council of the American Academy of Actuaries (Academy)
Full Alert under Alert No. 2016-L-3 available.
PBR Model Governance Checklist
The PBR Checklist Subgroup of the Life Practice Council of the American Academy of Actuaries (Academy) has developed a model governance.
AAA Practice Note on Life Principle-Based Reserves Under VM-20
The Life Principle-Based Approach Practice Note Work Group of the Life Practice Council has finalized and released a practice note,
Life Principle-Based Reserves Under VM-20 .
PBR Questions for LATF Consideration
The NAIC LATF has been working on PBR Questions for LATF Consideration (Revised 02/2017).
Principles-Based Reserving Implementation (EX) Task Force
The mission of the Task Force is to serve as the coordinating body will all NAIC technical groups involved with projects related to the PBR initiative for life and health policies and further assets the solvency implications of life insurer-owned captive insurers and alternative mechanisms.
Valuation Manual (VM)
The Valuation Manual (VM) together with the Standard Valuation Law (SVL) form the framework for PBR. Development of the VM is ongoing and the reader should be aware that the version presented in this link may not represent the most current version available.
2017 Edition of the Valuation Manual effective for year end 2017
2018 Edition of the Valuation Manual effective 1/1/2018
U.S. GAAP Targeted Improvements for Long-Duration Contracts
FASB project to develop improvements to insurance accounting for long-duration insurance contracts and may address recognition, measurement, presentation, and disclosure.
Draft: Proposed Accounting Standards Update to ASC Topic 944
A summary is also provided by
FASB In Focus.