The California Department of Insurance wants life insurers to notify it when they introduce annuity contracts.
The California department is supporting Assembly Bill 2384, a state bill that would require life insurers to file annuity contracts with the department before the insurers could market, issue or deliver the contracts in California.
Insurers would not have to get prior approval before selling annuity contracts, according to a note prepared by Annabel Chang, a state legislative analyst.
The California department believes the provision will help it “review critical policy developments,” Chang writes in comment on the bill. “The DOI believes that it will also be in a better position to identify and resolve policy form provisions that may be problematic and will be able to review the method for calculating the interest rate used in determining minimum nonforfeiture benefits for deferred annuities.”
Another section of the bill would require issuers of credit life insurance and accidental death insurance policies to pay interest if they fail to get death benefits out within 30 days of the death of the insured.
Insurers are supposed to notify named beneficiaries about the availability of the interest payments within 30 days after the death of the insured.
Issuers of ordinary life policies already have to pay interest if they take more than 30 days to process claims for death benefits, Chang writes.
California insurance regulators asked for the provision because they found when conducting market conduct exams that some carriers were taking longer than 30 days to pay credit life and accidental death policy claims. Current California law does not explicitly require issuers of such policies to pay claims within 30 days.
A.B. 2384 was introduced by Assembly member George Nakano, D-Torrance, Calif.
The Assembly Insurance Committee voted 16-0 April 14 to approve the bill and send it to the Assembly Appropriations Committee for further consideration.
Reproduced from National Underwriter Edition, April 23, 2004. Copyright 2004 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.