NU Online News Service, Feb. 14, 11:58 a.m. – Amid a charge by a consumer advocate that state insurance regulators are “inept” in how they are handling regulation of payment of small face amount policies and multiple policies, regulators continue to weigh different approaches to the issue.
The issue is not decided and will receive further discussion during the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
For over a year the NAIC has been trying to create regulatory guideposts to ensure that policyholders of small face amount policies, those with face amounts of $15,000 or under, receive a reasonable benefit for premiums paid.
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As part of that discussion, the issue of payment of multiple policies was raised. It became a point of discussion because of findings by the Illinois insurance department that companies had not conducted proper searches for owners ofmultiple small policies to make sure benefits were paid. Consequently, the Illinois insurance department instituted a regulation to address this issue that will become effective on July 1 of this year.
In an NAIC model regulation that is currently being exposed, the Life Insurance Multiple Policy model regulation, a safe harbor provision is offered as an alternative to requirements in the model. It is modeled after the Illinois regulation.
The issue, insurers say, is that they do not want to be held to specific criteria that could be referenced by plaintiffs’ attorneys. They add that they are willing to address problems where they exist. However, they say that they want a broader standard of reasonableness that would allow them to use existing systems to search for policyowners.