This might be a good time for the National Association of Insurance Commissioners (NAIC) to start the process of updating individual disability insurance valuation tables.
Members of the Individual Disability Experience Committee (DEC) at the Society of Actuaries made that argument recently in a presentation made to the Health Actuarial Task Force (HATF), an arm of the NAIC.
IDEC members told the task force that the SOA now has created the Individual Disability Experience Table, a new table based on data for the period from 1990 to 2007, that could be the basis for a valuation table update.
A valuation table is an official table that a regulator uses to evaluate an insurer's operations.
IDEC members want the committee to acknowledge that the new Individual Disability Experience Table exists, ask the American Academy of Actuaries (AAA) to sponsor the development of a new valuation table, and have IDEC help the AAA develop the valuation table.
IDEC said it would like to see HATF receive an AAA recommendation for a new valuation table by December 2013.
Individual disability insurers and their regulators have been using the 1985 Commissioner's Individual Disability A Table (1985 CIDA) and the Commissioner's Individual Disability C Table (1985 CIDC), tables based on data collected in the 1970s, IDEC members told the NAIC task force, according to a copy of the written presentation posted on the HATF section of the NAIC website.
Actuaries who have looked at the new individual disability table data have found that, overall, the number of disability claims tends to be lower than expected these days, but that the claims that do get filed tend to stay open longer, IDEC members reported.
A new valuation table would reflect current conditions better, IDEC members said.
A shift could lead to an increase in reserves for active lives but a drop in reserves for disabled lives, IDEC members said.