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 – SOA – 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

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

  • 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