- Report Published -
|Review of the State's Group Life Insurance Program for Public Employees|
|Joint Legislative Audit and Review Commission|
|SJR 251 (Regular Session, 1993)|
|Senate Joint Resolution 251 of the 1993 Session requested the Joint Legislative Audit and Review Commission (JLARC) to complete a study concerning the State's group life insurance program for public employee. The study was to focus specifically on the funding and rate structure of the program, which is administered by the Virginia Retirement System (VRS). To complete the study, JLARC staff were assisted by Alexander & Alexander Consulting Group, Inc., which was hired as a consultant.|
Overall, JLARC staff and its consultant found that the program's benefits are generous and well funded, and its premium rates are low compared to the programs of most other states. In addition, the performance of the VRS' actuary and the Life Insurance Company of Virginia in connection with the program has been reasonable and effective. However, JLARC's consultant concluded that the suspension of premiums during FY 1994 has decreased the amount of prefunding, and reduced the actuarial soundness of the program.
To strengthen the funding of the group life insurance program, this report recommends several actions. First, an independent evaluation should be performed prior to altering the program's funding methods or rates. Second, VRS should adopt a formal funding policy for the program. Third, VRS should perform another actuarial valuation prior to July 1, 1994 to identify the full effect of the premium suspension and to evaluate alternative funding approaches.
The consultant found that the uniform rate structure currently used by the program is consistent with the program's mandatory nature, objectives, and benefit design. The report recommends that VRS continue using a uniform rate structure. However, if benefit design changes are considered in the future, a non-uniform rating structure should be carefully assessed.