• Kevin A. Marti, vice president of administration and chief actuary for Westfield Life Insurance Company
  • However, the regulation, as written, states that if the industry cannot agree on a generally recognized expense table, we'll just fall back to use of fully allocated expenses, which would be a wonderful proposition!
    • Small companies would basically be out of business at that point, because if you can't illustrate it, I don't believe you can sell it.
  • While I appreciate Tom's comments about pricing and illustrating, from my perspective, it's hard to separate the two.
  • I think a great number of actuaries have embraced macro pricing.
  • It has even been described as a generally accepted actuarial practice methodology by some prominent actuaries.
  • In my opinion, to not allow illustration of products developed on this premise looks and smells very similar to "price fixing."
  • We could ask any number of reinsurers in this room how often they have had the luxury of using full expense allocations in their pricing.
    • I think you'd find out that they can't do so very often.
  • Furthermore, the required disclosure of the expense allocation method chosen on the illustration can be utilized by agents in competitive situations to an even greater extent than some of the size and financial ratings comparisons that have been used against smaller companies in the past.
• I'm disappointed that the NAIC and the ASB have reached this point.
• When I read the program information, I was struck by the antitrust disclaimer that we have at the front of the program.
  • I want to read that disclaimer to you.
    • It says, "Under no circumstances shall meetings or programs be used as a forum for representatives of competing companies and/or firms to reach any understanding whatsoever either about the pricing of specific products, whether particular products should be marketed to the public, or terms on which products are marketed."
    • That sounds to me like some of the things that are built into and implicit in the illustration model regulation.

1995 - SOA - Sales Illustrations, Society of Actuaries - 14p