Work on a regulation to implement changes to the Standard Nonforfeiture Law the National Association of Insurance Commissioners adopted in 2003 is focusing on whether to use a single rate for the whole contract.[@@]
Regulators’ discussions center around whether to use one nonforfeiture rate for the entire contract or different rates for equity and fixed components of the contract.
The regulation is being drafted to effect changes to the Standard Nonforfeiture Law for Individual Deferred Annuities Act, adopted by the National Association of Insurance Commissioners, Kansas City, Mo. in March 2003. The changes set up a structure for determining minimum nonforfeiture amounts using an interest rate that is the lesser of 3% per year plus a 5-year constant maturity rate calculated as an average of Treasuries less 1.25%.
Among the issues regulators discussed recently was whether the SNL calls for a single rate and whether a single rate could allow insurers to play games with a policy design.