Disciplined Current Scale

The first question that I'll pose will deal very basically with the concept of a disciplined current scale, and that simply stated is:

  • What approach does the illustration actuary take when developing a disciplined current scale?

--  Thomas A. Phillips

1996 - Life Insurance Sales Illustrations—What’s Next?, Society of Actuaries - 22p

I think a point made earlier, and one I have certainly heard discussed, was that profit, or a measure of profit, does not need to be included in the derivation of a disciplined current scale.

  • Although that may be theoretically true, it may be a practical impossibility to actually create a disciplined current scale with no profit because the self-support and lapse-support tests have to be met.
  • It seems to me that a company cannot sell a policy and pay dividends or have other nonguaranteed elements that were derived on the basis of no profit. They have to reflect profit at
    some point in time.
  • One of the results of this disclosure item is that when profit, which may not have been included before, is introduced into a currently payable scale, it would probably have to be disclosed at that time. It could be a little embarrassing.

--  Thomas L. Bakos

The only requirement with respect to nonguaranteed elements is that a disciplined current scale be used.

  • Theoretically, there is a maximum disciplined current scale.
  • Any scale that depicts policy performance less favorable than the maximum is a disciplined current scale.
  • It seems likely, however, that many companies will tend to illustrate close to the maximum.

--  Thomas L. Bakos

1996 - SOA - Implementing the Illustration Regulation: The Clock Is Ticking, Society of Actuaries - 25p

  • Mr. Higgins asked the interested parties what elements they thought were important to include in a draft containing disciplined current scale.
  • Ms. Lanam said it should include definitions that were broad enough for all the products that would be illustrated.

1994-3, NAIC Proceedings -  p567 (609)

 

  • The good news was that a new discipline was imposed on company dividend practices.

1991 - SOA - Disclosure Systems: Can an Ideal Method be Found?, Society of Actuaries - 22p