Retrospective

  • Retrospective vs Prospective
  • "Prospective" implies looking forward from the valuation date to future benefits the insurance company will provide and future premiums to be paid by the policyholder.
  • "Retrospective" implies looking back from the valuation date to benefits already provided and premiums already paid since the contract was issued.
  • Retrospective methods seem to be better suited to certain newer life insurance plans, such as universal life plans, where it is difficult to place a value on future benefits that would be provided.

1983-2, NAIC Proceedings

c. Retrospective Valuation and Nonforfeiture Value Procedures

  • At its meeting in December 1982, the (A) Committee expressed an interest in retrospective valuation procedures, and asked the group to begin working on such a topic.
  • As assigned to the group, the topic would involve a study of whether the traditional prospective methods used to determine minimum reserves should be replaced by
    retrospective methods.
  • "Prospective" implies looking forward from the valuation date to future benefits the insurance company will provide and future premiums to be paid by the policyholder.
  • "Retrospective" implies looking back from the valuation date to benefits already provided and premiums already paid since the contract was issued.
  • Retrospective methods seem to be better suited to certain newer life insurance plans, such as universal life
    plans, where it is difficult to place a value on future benefits that would be provided.
  • The group considered this topic for the first time in March 1983, and noted that, if retrospective procedures are used to define minimum reserves, then the retrospective procedures should also be used to define minimum cash values and other minimumĀ 
    nonforfeiture values.
  • Therefore, the adoption of retrospective procedures would probably require extensive revision of both the standard valuation law and the standard nonforfeiture law for life insurance.
  • Perhaps, complete redrafting of these model laws would be needed.
  • Since this is a new topic, it is not mentioned in the Winter 1982 report of the group under the heading "Other Topics."

1983-2, NAIC Proceedings