Larry Gorski

  • Illinois Insurance Department - Actuary

  • They are complaints about things that we can’t do anything about because the contract might be a universal life type product with nonguaranteed elements, and there is no regulatory framework to deal with those issues.

  • Those complaints just fall by the wayside because there is nothing that can be done.

--  Larry Gorski, Illinois Insurance Department - Actuary

1996 - SOA - Nonforfeiture Law Developments, Society of Actuaries - 23p

  • The Larry Gorski Amendment that was adopted says in-force illustrations cannot be less favorable than sales illustrations or the actuary would have to disclose that;
    • the idea is that buyers would be able to find out that a company was utilizing a bait-and-switch strategy in its illustrations

--  William C. Koenig [Northwestern Mutual]

1996 - SOA - Update on Life Insurance Illustrations, Society of Actuaries - 24p

  • In my presentation, I will be talking about the views of the regulators in the U.S. on the illustration problem.
    • Some of the comments that we have heard from regulators about the illustration situation suggest feelings of, if not outright despair, growing frustration.
    • A couple of them spoke sadly of the futility of regulating an illustration when the real issues involve the agent or the company.
    • Larry Gorski of the Illinois department mentioned that in states that do not regulate advertising or promotional materials, misleading statements can be rampant in those materials even if the illustrations are made pure.

 --  Benjamin J. Bock, Transamerica Occidental

1992 - SOA - Life Insurance Sales Illustrations, Society of Actuaries - 16p

  • 1984 - SOA - NAIC Model Investment Law Update, Society of Actuaries - 24p
  • Larry Gorski:  Our goals are basically the same: We want a model investment law to promote solvency. 
  • Another key decision point that's controversial from many different perspectives is, how much discretionary authority should commissioners have? 
  • You sort of implied that we have a company that's a heavy user of derivative instruments for hedging purposes. Currently the annual statement, its statutory statement, may not even indicate that. Many of the derivatives are over-the-counter instruments, so there's no real reporting in the annual statement
  • When I first started reviewing memorandums three years ago, the typical response I would get from an actuary is that there's no need to model the company's derivatives because it uses them for hedging purposes, and if the company doesn't incorporate them in its modeling, it is obviously being conservative.
    • Well, that argument really didn't buy much time with me.
  • The next go around, I saw much better treatment of derivative instruments, but I only look at 35 or 40 memorandums a year, so obviously I have not touched the full range of industry uses of derivatives.
  • I expect Schedule DB for 1994 is going to open my eyes, but the answer to your question is, I do expect a valuation actuary doing an analysis for a company that is a user of derivatives to fully incorporate those instruments and the performance of those instruments in the cash-flow modeling.
    • To me it's ridiculous not to because many of these instruments, while they may perform one way in one environment, could blow up in another environment.
  • There may be some hidden bombshells in those instruments, so the actuary needs to think about that and incorporate it in the modeling.

-- Larry Gorski

⇒  (a recent Fellow of the Society of Actuaries, a member of the American Academy of Actuaries, and has been employed by the state of Illinois since 1973. He's very active in the NAIC. He's chairperson of the life risk-based capital (RBC) working group, chairperson of the invested asset working group, a member of the NAIC life and health actuarial task force, and a member of the NAIC asset valuation reserve (AVR) interest maintenance reserve (IMR) working group. As most of you might know, he's a frequent speaker at many professional meetings.)

  • Larry Gorski, IL Regulator: The next issue had to do with the plan summary.
    • The plan summary is a document that is going to be given to a policyholder, and it is to inform the policyholder as to how values will emerge, how experience assumptions will change, etc.
      • Other issues discussed were the details of that plan summary.
      • I have been one of the advocates of a rather detailed plan summary.
    • The plan summary is in the description of the “deal” between the company and the policyholder.
      • I feel that it should be a rather complete description of the deal.
      • Other people have different views.
    • We were leaning towards a comprehensive description of the plan and plan summary.
  • Douglas A. Eckley:  Are you paying attention to the buyers and to the ability of policyholders to understand these documents?
    • The reason I ask is, in my opinion, right now, many policyholders do not understand what they are buying.

1996 - SOA -  National Association of Insurance Commissioners (NAIC) Recent Developments, Society of Actuaries - 14p