Regulators At NAIC Meeting Agree To Return To Triple-X

Regulators At NAIC Meeting Agree To Return To Triple-X

By

New Orleans

The National Association of Insurance Commissioners agreed here at its summer meeting to take another look at Guideline Triple-X.

The guideline, officially known as the Valuation of Life Insurance Policies model regulation, increased reserve requirements for term life insurance policies, to cover the risks involved with guaranteeing benefits and rates over extended periods of time.

Some NAIC members who say life insurers are finding ways to skirt the requirements have persuaded the Kansas City, Mo.-based association to consider the possibility of developing two new guidelines.

One would deal with term life insurance policy guarantees; the second with universal life insurance policies.

Regulators involved with the review will discuss issues such as the use of shadow accounts, which are account values with charges and credits that are more favorable than guarantees in the basic policy. The cash value in the shadow account allows the policy to remain in force although the money in the shadow account cannot be spent.

Some regulators are also worried about the use of reinsurance for products regulated under Triple-X, according to Sheldon Summers, a life actuary with the California insurance department.

Tom Foley, a life actuary with the Kansas department, questioned the need for new guidelines. He said Triple-X already gives regulators the authority to deal with efforts to get around the requirements.