Salt Lake City
Three insurance commissioners comprised a panel here that surveyed some of the most high-profile regulatory issues currently before the National Association of Insurance Commissioners.
Speaking here at the spring conference of the National Alliance of Life Companies, Utah Commissioner Merwin Stewart shared his views on suitability; South Carolina Commissioner Ernst Csiszar discussed the small face amount issue; and Arkansas Commissioner Mike Pickens gave a status report on the progress the NAIC has made in the last year toward implementing its statement of intent.
Stewart gave a reflective, rather than a nuts-and-bolts regulatory, talk about suitability. “We cannot create enough rules to prevent policies being presented in a wrong manner,” he said. “So the way to handle suitability is to base it on principle.”
When asked to elaborate on what that principle was, Stewart said it is “for the seller to get the buyer to understand; to first find out what the need is and whether it is of value to the customer.”
He continued, “We need to get to the point where we can do the job without all the intricate rules because there will always be something for which there’s no rule.”
Stewart said he understands that companies need to make “a reasonable profit,” but that this should be in the context of “striving to give more value to customers at a reasonable price.”
Companies and agents, he said, need “to follow the golden rule; in other words, if you were on the other end, how would you like it to be?”
Csiszar, throwing down the gauntlet to his host association, said he was “unhappy with the small face amount issue,” and that one reason for that is “the approach the NALC is taking on it.”
He likened the approach of the NALC–which mainly represents smaller life companies–to the approach “a husband and wife would take when they suspect each other of adultery–it’s based on suspicion and mistrust.”