Work On Interstate Compact Work Proceeds As Summer Meetings Near

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Efforts to develop product standards and to continue educating legislators on the need for a single point of filing for life insurance products are advancing in preparation for three important meetings of regulators and legislators this summer.

Next month, regulators will discuss progress on product standards for an interstate compact model when the National Association of Insurance Commissioners, Kansas City, Mo., meets.

In July, the National Conference of Insurance Legislators, Albany, N.Y., and the National Conference of State Legislatures, Denver, each will hold their separate meetings at which time the compact will be discussed and possible action taken to endorse it.

The support of state legislators is necessary for the success of the project and toward that end the NAIC, NCOIL and NCSL have been holding forums to provide information on the issue.

NCOIL has not taken a formal position on the interstate compact, but a resolution possibly could be introduced during its summer meeting in Williamsburg, Va., from July 10-13, according to Sue Nolan, NCOIL deputy executive director.

NCOIL will soon introduce a CD-Rom for legislators that outlines the issue and examines the use of a compact, she added.

The NCSLs executive committee could also possibly vote on the issue during its meeting in San Francisco from July 21-25, says NCSLs insurance project manager, Cheye Calvo.

Legislators are expressing “a growing comfort level with the idea of a compact as a valid mechanism for preserving state regulation,” Calvo says.

The NCSLs task force also received seven proposed amendments to the adopted NAIC model in an attempt to respond to concerns that had been raised during discussions on the compact.

Among the issues that are addressed are access to compact meetings and public meeting policy. One amendment also strikes language that says the compact panels decision “be the final action of the Commission and not subject to review by any court.” For the full text of the proposed amendments, see http://www.ncsl.org/programs/insur/compactamendmts.pdf.

One of the amendments, made by the Indiana House of Representatives changed language to say that the internal accounts and audit papers are not confidential and that such material must be shared with the commissioner of any compacting state.

The compact model has been passed in one house of Indianas state legislature and has been introduced in Alabama, according to NAIC spokesman Matt Brisch.

On May 7, Iowa Governor Tom Vilsack signed the compact into law, said Scott Kinney, a spokesman for the Iowa insurance department.

In preparation for the NAICs summer meeting in New York from June 21-24, regulators are working on standards for product areas including disability insurance, long term care insurance, annuities and life insurance.

Regulators involved decided to focus on product standards for individual, group and business overhead DI products. While their discussion touched on whether products should be examined as short term and long term, it was decided to look at DI as one product because that is the way it is offered on the market.

A look at long term care standards will start with an examination of both individual and group LTC products.

One discussion revolved around the use of the definition of LTC in the existing Long Term Care Insurance model act and regulation and how it encompasses any benefit purporting to have an LTC component.

Louise Kamikawa, a California regulator who is overseeing the effort, noted that “it establishes the floor. I want everyone to be clear on that.” States such as California have long term care regulation that is considered to be more rigorous than other states.

In the annuity product area, it was decided to start with standards for a simple individual variable and fixed annuity that was developed for the Coordinated Advertising Rate and Form Review Authority project. Then standards would be created for products with “bells and whistles” and additional product features, according to a discussion.

Work on life insurance standards will also start with existing CARFRA standards for basic term life products and then work on individual universal life standards, according to a discussion among regulators. And, in theory, regulators say, work on the term life standards could be altered sufficiently to work well for whole life insurance standards.

Meeting a goal of developing standards for five products was also brought up. But at least one regulator noted that the process was slow when the CARFRA project was being developed, and more time might be needed in the compact effort.

The relevancy of the products chosen for which to develop standards was also raised.


Reproduced from National Underwriter Edition, May 19, 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.