State legislators will tackle the issues of insurable interest of life insurance, the affordability of prescription drugs and broker disclosure when they meet March 3-6 for the spring meeting of the National Conference of Insurance Legislators in Hilton Head, S.C.
An NCOIL resolution opposes efforts to expand states insurable interest laws to allow third parties to make such life insurance purchases. The resolution is being introduced by Rep. Larry Taylor, R-Galveston, Texas.
The resolution urges other states “not to do what Texas did,” says Rep. Craig Eiland, D-Galveston, Texas. The definition of insurable interest was expanded in Texas and now there are investor-owned life insurance products being sold, he says. “The big picture deterioration of insurable interest is a concern,” he adds.
“The biggest concern is expanding insurable interest in a way that undermines the central concept of the connection between the beneficiary and the insured. [In third-party purchases] the owner and the beneficiary have no relationship,” Linda Lanam, a vice president with the American Council of Life Insurers, Washington, explains.
Insurers are concerned about “the law of unintended consequences” and the effect that it may have on the life insurance product, she adds.
Currently, North Carolina and Tennessee have adopted language that broadens the definition of insurable interest, and Texas already had language that was sufficiently broad to allow the use of investor-owned life insurance. Virginia, on the other hand, has narrowed language defining insurable interest.
Lanam says that since most of the investor-owned life insurance transactions are private placements, it is difficult to track them and how they have affected life insurance markets in the states where they are permitted.
At press time, LILAC Capital, Nashville, a proponent of investor-owned life insurance, could not be reached for comment.
Resolutions addressing the availability of prescription drugs are being sponsored by state Representative Brian Kennedy, D-Hopkinton, Westerly, R.I.