NAIC Urged To Do Full Assessment Of Illustrations; Regulators Demur


Insurance coverage commissioners tabled a proposal immediately to create a working group with a cost aimed toward finishing a complete and coordinated assessment of annuity and life insurance coverage illustrations.

Birny Birnbaum, govt director of the Middle for Financial Justice, is proposing a Life Insurance coverage and Annuity Illustration Working Group. The brand new group would take the place of the Annuity Disclosure Working Group, but in addition choose up elements of illustration-related work assigned to not less than three different working teams, Birnbaum stated.

“NAIC mannequin rules concerning life insurance coverage and annuity illustrations and promoting allow – and in some instances, require – deceptive, complicated and/or misleading info be supplied to shoppers within the type of illustrations,” Birnbaum stated in a letter to insurance coverage commissioners.

The Life Insurance coverage and Annuities Committee held a convention name immediately and accepted a listing of 2020 costs for its working teams. Chairman Doug Ommen, Iowa insurance coverage commissioner, famous that the committee can take up costs at any time, however didn’t have sufficient time to contemplate Birnbaum’s proposal.

“Alabama may be very supportive of the CEJ proposal, however we don’t imagine immediately is the day,” stated Steve Ostlund, actuary with the Alabama Division of Insurance coverage.

A few of the working teams are in the midst of work, together with accepting feedback on illustration points, famous Michael Lovendusky, vp and affiliate common counsel for the American Council of Life Insurers.

The CEJ proposal was simply dropped at the eye of ACLI on Friday, he added. The proposal is healthier off being mentioned on the NAIC Fall Assembly in Austin, Texas Dec. 7-10, Lovendusky steered.

‘Diametrically Opposed’

The brand new group would take over the work of separate working teams attempting to repair issues with life insurance coverage and annuity illustrations. Whereas these efforts have been productive, Birnbaum stated, the teams are taking “diametrically opposed approaches.”

He supplied a few examples:

The annuity illustration guidelines don’t embody a cap on crediting charges. Life insurance coverage illustration guidelines do require a cap.
Annuity illustration guidelines give shoppers a sequence of return danger. Regulators require no sequence of return danger with life insurance coverage illustrations.

“The approaches to illustrations for all times insurance coverage and annuities – significantly for listed merchandise – are radically inconsistent even for merchandise that function similarly,” Birnbaum wrote.

In the mean time, the Life Insurance coverage Illustrations Working Group is attempting to crack down on wayward listed common life insurance coverage illustrations by way of an modification to Actuarial Guideline 49.

The tentative change — which nonetheless wants last approval — would bar IUL illustrations with bonuses or multipliers from illustrating greater than IUL merchandise with out these options.

In the meantime, on the annuity aspect, the Annuity Disclosure Working Group is learning a proposal to extend the time indexes should be in existence for use in annuity illustrations from 10 to 15 years. Regulators are involved that buyers are being misled by unrealistic listed annuity illustrations.

InsuranceNewsNet Senior Editor John Hilton has lined enterprise and different beats in additional than 20 years of each day journalism. John could also be reached at [email protected]. Comply with him on Twitter @INNJohnH.

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