Connecticut Senate Bill SB00185

Connecticut 2014 Regular Session

• Introduced: 2/19/14
• Refer: 2/19/14
• Report Pass: 3/20/14
• Refer: 3/31/14
• Report Pass: 4/7/14
• Engrossed: 4/17/14
• Report Pass: 4/19/14
• Chaptered: 5/21/14
• Enrolled: 5/28/14
• Passed: 6/12/14

Caption

An Act Concerning Changes To The Standard Valuation And Nonforfeiture Laws, And The Use Of The National Association Of Insurance Commissioners' Valuation Manual.

Impact

The passage of SB00185 will likely have significant implications for the insurance industry within the state. By adopting the NAIC's valuation manual, it is expected that insurers will be required to implement new processes for calculating reserves, potentially increasing their financial responsibilities. This change aims to improve consumer protection by ensuring that insurance companies maintain sufficient capital to cover policy liabilities. However, the move towards a principle-based system may also introduce complexity, as companies must evaluate and manage a range of risks tailored to their specific circumstances, which could strain smaller insurers without robust actuarial resources.

Summary

Senate Bill No. 185, also known as An Act Concerning Changes To The Standard Valuation And Nonforfeiture Laws, seeks to align state regulations with the standards established by the National Association of Insurance Commissioners (NAIC). The bill incorporates a principle-based valuation method for life insurance and annuity contracts, which emphasizes a more nuanced approach to determine reserve levels based on company-specific risks and assumptions. This shift towards a principle-based methodology is intended to enhance the adequacy of reserves held by insurance providers and ensure that they are well-positioned to meet their policyholder obligations under various financial scenarios. The legislation is part of a broader effort to modernize and strengthen insurance regulation within the state.

Sentiment

The overall sentiment regarding SB00185 appears to be supportive among industry professionals, particularly those who advocate for modernization in insurance practices. Supporters argue that the updated valuation standards will make the regulatory environment more consistent and transparent. However, there are concerns about the potential burdens placed on smaller insurance firms and the adaptability of existing frameworks to these new requirements. Some stakeholders express anxiety that the intensive nature of the new evaluations could lead to increased costs, which might ultimately be passed on to consumers.

Contention

A notable point of contention among stakeholders is the balance between rigorous valuation standards and the practical implications for insurers, especially smaller companies. Critics argue that while the principle-based valuation methods may increase the financial security of insurers, they could disproportionately impact those less equipped to handle complex calculations and regulatory compliance. As the bill requires that companies develop detailed internal controls and fulfill reporting obligations based on their specific risk profiles, a debate exists over how these requirements might affect competition and consumer choice in the insurance market.