ACLI Outlines Priorities For NAIC Meeting

On the issue of developing an interstate compact that would create a single body for the filing of life insurance products, Ferguson notes that ACLI is supportive of the project. In states where the compact has been introduced such as Indiana, ACLI has worked for its enactment, he says.

However, he raised concern about changes to the compact, saying it could result in a lack of uniformity. Any changes should be introduced and done at one time rather than in increments, Ferguson continues.

Of importance to companies is a model Standard Nonforfeiture Law for Individual Deferred Annuities which could be advanced during the spring meeting, Ferguson says.

States are now considering lowering required nonforfeiture rates to reflect lower interest rates, he explains. Rather than have temporary measures put in place in states, ACLI wants to see “a permanent solution” put forth, he adds.

Currently, over 20 states have reduced the nonforfeiture interest rate to 1.5%, with two-thirds of those states including a sunset provision that would result in the rate reverting to the current 3% standard at some point in time, Ferguson says. A handful of those 20 states have changed the rate permanently, he continues, and the other 30 states still have the 3% rate in effect.

Failure to take action could result in products with short-term guarantees being pulled from the market, he cautions.

Reproduced from National Underwriter Edition, March 10, 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.