Louisiana Senate Bill SB409

Louisiana 2016 Regular Session

• Introduced: 4/5/16
• Refer: 4/6/16

Caption

Provides relative to valuation of life insurance reserves. (gov sig)

Impact

The proposed changes in SB 409 have significant implications for domestic life insurance companies in Louisiana. By creating a more streamlined framework for how reserves are calculated and allowing for single-state exemptions, it may enable local insurers to maintain a more pragmatic approach to reserve management. Critics may argue that such a reduction in complexities associated with reserve calculation could lead to risks if not managed accurately, as some companies may opt to use prior methods that could be less conservative in their financial representations.

Summary

Senate Bill 409 aims to adjust how life insurance reserves are calculated in Louisiana. Specifically, it transitions from a statutory formula to a principle-based reserves system that adheres to the Standard Valuation Manual, provided that the national standard has been adopted by sufficient states. Furthermore, the bill allows the commissioner of insurance to grant exemptions for specific types or lines of insurance products for companies that operate exclusively within Louisiana. This repeal of existing exemption processes is notable because it centralizes and simplifies the requirements for life insurers in the state, potentially impacting how they manage their financial reserves.

Sentiment

The general sentiment surrounding SB 409 is one of cautious support among insurance regulators and industry stakeholders who appreciate the move towards modernizing valuation practices. However, there's skepticism regarding the potential risks involved in relying on older methods for reserve calculations. Industry advocates highlight that this bill is a step toward aligning Louisiana's regulations with national standards, while opponents may stress the importance of maintaining stricter oversight to protect policyholders.

Contention

The points of contention primarily revolve around the implications of allowing the commissioner to grant exemptions, and the potential for companies to revert to older valuation methods. Opponents worry that these changes could undermine accountability and transparency in financial reporting within the insurance industry. Supporters counter that the bill will provide the necessary flexibility for local insurers to thrive in a competitive market while still upholding essential actuarial standards.