The quest for an answer to what constitutes a suitable life insurance sale will take a narrower focus as regulators develop a model regulation to bring the five-year debate to a final resolution, according to Merwin Stewart, Utah insurance commissioner.
Regulators huddled during the winter meeting of the National Association of Insurance Commissioners here last month to advance work on the issue. The model, according to Stewart, who is chair of the Life & Annuities “A” Committee, will recognize that “both insurers and producers have responsibilities that need to be considered.”
It should “clarify responsibilities that already exist,” he said.
The aim, he said, is products that are appropriately sold. What is being sought, he continued, is to satisfy regulators that there is a system in place. A set of standards that insurers follow will be a protection for the companies, he added, and if they document how they follow procedures, it will provide protection from legal issues, Stewart said.
The model regulation will take a targeted approach to certain areas of abuse, particularly older people and annuities with complex features, Stewart explained.
“We know what they want and need,” he said, speaking of regulators understanding of both insurers and consumers.
But insurance representatives such as Scott Cipinko, executive director of the Life Insurers Council, Atlanta, says the tools are already there but are not enforced. Instead, another model will be developed that “supersedes models already out there.”
“It is difficult to identify what suitable is,” said Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas. Rather, the effort should go to examining what is unsuitable, he continued.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 6, 2003. Copyright 2003 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.