A pilot for single point of filing for life and annuity products will be given a jump-start with an interstate compact approach that could be fully adopted by the National Association of Insurance Commissioners in September.
The Coordinated Advertising Rate and Form Review Authority is a regulatory effort to streamline product filings by eliminating filing deviations among states.
Terri Vaughan, Iowa insurance commissioner and president of the NAIC, and Frank Fitzgerald, commissioner of the Michigan Office of Finance, Insurance and Securities and co-chair of the new Interstate Compact working group, said that even as the compact takes shape this spring, the NAIC will be speaking with legislators about the approach. The intent is to get the compact on legislatures calendars this fall and to start having it enacted at the beginning of 2003.
Details of the interstate compact approach are still being worked out, but Fitzgerald said that under rare circumstances, a company could opt out of the CARFRA program if it so desired. However, he said, an opt-out would be done along product lines and would have to be for an entire product line.
Currently, the pilot has only tested a term life product filed last September by Prudential Financial, Newark, N.J. Other product lines in the project include flexible premium deferred annuities and Med Supp products as well as individual and term life insurance. Long term care and disability insurance could be added later.
An interstate compact would allow for better governance and would be structured so that both large and small states could participate in that governance on a rotating basis, according to Fitzgerald. It would allow for changes to be implemented more quickly, he added.
Elements of an approach advocated by the American Council of Life Insurers, Washington, such as the opt-out standard will be included in the compact, he said. The ACLI had advanced a proposal supporting enabling legislation to create a mechanism to implement CARFRA.
However, Vaughan said that “part of the problem with the ACLI proposal is that it doesnt get to a sufficient level of detail.” If NAIC wants big states to participate in CARFRA, there needs to be more detail points such as governance and an appeals process.
ACLI supports a national system of product filing, said Bruce Ferguson, vice president of state relations. But, he added, ACLI needs to review whether a compact system meets its objectives.
The flexibility of a compact to allow changes to be made quickly depends on its structure, Ferguson said.
More products have not been filed through CARFRA because even if a companys product filing meets CARFRA criteria, individual state standards and policy form requirements remain, he said.
Reproduced from National Underwriter Life & Health/Financial Services Edition, March 25, 2002. Copyright 2002 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.