The new C-3 Phase II RBC and VA CARVM
reserve methodologies proposed by the National Association of Insurance Commissioners (NAIC) require that reserves and capital are calculated by evaluating the tail risk from thousands of scenario simulations.
Although, he said that VA CARVM
is a principles-based approach to reserving, Bruins added that immediate action is needed.
A stochastic scenario approach is a major part of AG CARVM.
In the CARVM scenarios, Elstein noted that "bad" events that happen later rather than in early contract years are not being reflected in stochastic scenarios.
Tom Campbell, a life actuary with Hartford Life and chair of the VA CARVM
working group of the Academy, said one option would be to go to the Academy website and download models for an alternative methodology.