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NAIC Advances Resolution Opposing Limited Term Licenses

By Jim Connolly

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Many top insurance regulators are rejecting the idea of creating a special, limited license for insurance agents who specialize in selling term life insurance.[@@]

The Market Regulation and Consumer Affairs “D” Committee, an arm of the National Association of Insurance Commissioners, Kansas City, Mo., voted here at the NAIC’s summer meeting to approve a proposed resolution opposing a limited term license.

The NAIC’s executive committee and plenary, or body that represents all NAIC voting members, still must approve the proposed resolution before it can take effect.

During the “D” Committee hearing, 2 insurance commissioners, Jim Poolman of North Dakota and Joel Ario of Oregon, and 1 consumer advocate, Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, spoke in favor of the proposed resolution.

Poolman is chairman of the NAIC’s Producer Licensing Working Group, a “D” Committee offshoot that approved the proposed resolution at the NAIC’s spring meeting in March.

Primerica Financial Services, Duluth, Ga., a unit of Citigroup Inc., New York, challenged the proposed resolution, saying it would cut off a way to reach underserved consumers.

Ario agreed that supporters of limited term licenses have a valid point about access to insurance, but he said he was supporting the resolution because of the need for states to have uniform producer licensing laws. He said some states could put more agents in the market by offering life-only licenses rather than requiring life agents to have life and health combination licenses.

Poolman said the need for uniformity in insurance regulation is a good reason to support the resolution.

Birnbaum said the discussion creates a good opportunity for regulators to take an in-depth look at meeting the needs of the underserved market. But there is no reason to conclude that increasing the number of agents would increase the availability of insurance to the underserved market, Birnbaum said.

Here are some comments made about the proposal at the “D” Committee meeting and a limited term license hearing:

- Bill Anderson, a representative for NAIFA, said putting agents in the market who don’t understand life insurance is not a benefit to a consumer. That also would complicate the producer licensing system, he said.

- Rep. Shirley Bowler, a state lawmaker from Louisiana who supports the concept of limited term licenses, said at the hearing that states should provide incubators for new ideas that can help meet consumer needs. If Congress does not believe the insurance market is serving a broad segment of the public, it might raise revenue in the future by getting rid of life insurance tax benefits, Bowler said.

- Peter Schneider, executive vice president of Primerica, talked about a man who took a construction job in Iraq to help make ends meet and was killed. His family received a $400,000 check, according to Schneider. A limited term license would put agents in the market to help other families that might need death benefits in the event that the breadwinners were killed, Schneider said.

- Michael White of Michael White Associates, Radnor, Pa., a Primerica consultant, said his firm found that only 33% of all persons owned agent-sold life insurance, down from 56% in 1960 and 43% in 1984.

- Michael Lovendusky, a representative for the American Council of Life Insurers, Washington, said an ACLI committee is looking at the underserved market issue.

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