Potential impact of changes in U.S. statutory reserve regulations on term insurance pricing

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The changes implemented by the New York State Department of Financial Services (NYDFS) are expected to prospectively reduce term life insurance reserves by 30% to 35%. NYDFS proposed accomplishing this reduction by applying prospective mortality improvement factors and implementing a two-year full preliminary term period. What NYDFS did not say—but which has been communicated—is that it is opposed to principle-based reserves and doesn't plan to adopt VM-20. This research paper discusses the impact of these changes.