Thursday, February 11, 2010

Agreement Reached on Final Piece of LE Best Practices

By Jim Connolly
An actuarial table that will create a benchmark for life expectancy providers is now finalized and will be officially released on schedule at the end of March, according to Scott Gibson, chair of a subgroup working on the project.

The subgroup’s work is the final piece of a Best Practices effort initiated by the Life Insurance Settlement Association, Orlando, Fla., and spearheaded by Michael Fasano, CEO and president of Fasano Associates, Washington, an LE provider.

The group’s charge was to create a table that was a baseline for all LE providers who could then adjust it according to how they develop their own actual to expected life ratios. What is being developed is a table with a good slope which will provide a “measuring stick so that good comparative measures can be made,” according to Gibson who is a consulting actuary in Lewis & Ellis’s Dallas office.

The first step in the process will occur by February 19 when all LE providers submit data for the table, according to Gibson. That data may be new, refreshed or existing data, he adds. The data will then be compiled and a table developed, Gibson explains. Completion of that table is expected by the end of February, Gibson continues. Both the table and an accompanying report are expected to be released by the end of March, he adds. The table could be updated annually if needed, Gibson continues.

Fasano said that the completion of the table is “very good for LISA and for the industry.” The subgroup’s work was able to get everyone on the same page so that a table could be developed, he adds.

After the table becomes publicly available, no later than March 30, the Best Practices committee and the subgroup that developed the table will remain in case additional work is needed at a later point, Fasano says.

The timing is important, according to Fasano, who says that the combination of Best Practices including the finalized table will give investors and potential investors who are going to be at the Trade Mission renewed confidence in the life settlement industry. The Trade Mission is an educational effort designed to teach investors and potential investors about the life settlement industry. The three city Mission will run from February 23-26 in London, Luxembourg City and Zurich.

The Best Practices effort and the new table will allow investors to make informed decisions on both LEs and the pricing of policies that they purchase, Fasano says. “It will give them “meaningful and comparable information on the accuracy of LE providers,” he adds.

This article first appeared in Life Settlement Review.

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