Regulators At NAIC Meeting Agree To Return To Triple-X
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.
Rochelle LeTourneau, a state government affairs manager with ING Americas, Minneapolis, asked for new guidelines that are clear and uniform.
But Larry Gorski, chief actuary with the Illinois department, said striving for clear, uniform guidelines would be the “worst possible goal,” because regulators are interested in fighting any action taken with the intent of sidestepping Triple-X.
If regulators write clear, uniform, specific rules, insurers will soon find ways around the rules, Gorski said.
Focusing on broader concepts will be more effective at preventing companies from getting around the intent of Triple-X, Gorski said.
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Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.