Product suitability and replacement will be among the areas that regulators focus on when they meet in Orlando, Fla., March 4-7, for the spring meeting of the National Association of Insurance Commissioners.
Expanding the Senior Protection in Annuity Transactions model regulation to include all age groups will be one project in which the Life Insurance & Annuities “A” Committee works on during the spring meeting, according to Jim Poolman, North Dakota insurance commissioner and “A” chairman.
Poolman says there seems to be consensus over extending the protections in the model to consumers of all ages, citing the support of the American Council of Life Insurers, Washington. He says it is possible that the “A” committee could adopt the amendments to the model during the spring meeting and, if that occurs, the amended model could be approved fully by the NAIC either on a conference call or at the summer meeting in Washington.
Companies have systems in place, so there should not be great cost to extend protections to all consumers, Poolman adds.
Another issue that will come under discussion, he says, is the possible revision to the Life Insurance and Annuities Replacement model regulation to exempt term conversions by affiliates within the same corporate family.
The model offers consumer safeguards in situations where the replacement of a contract is being considered. It was developed in response to concerns over the replacement of life insurance contracts following widespread problems in the mid-to late 1990s.
Poolman says these are not contracts that are being replaced with a different company, but rather are contracts within the same corporate structure.
Although the issue of investor-owned life insurance contracts will not be on the agenda during the March meeting, Poolman says it will receive extensive discussion during a hearing sponsored by the New York insurance department tentatively planned to be held in New York in mid-May. The hearing, he says, will look at IOLI, stranger-owned life insurance and insurable interest.
Poolman says a joint session of the “A” committee and the Market Regulation and Consumer Affairs “D” Committee to examine equity indexed annuity products will help determine whether “there are any potential holes that need to be filled” with additional regulation.
Iowa Insurance Commissioner Susan Voss, chair of the “D” committee, says the discussion during both an educational session and the joint hearing will focus on issues such as how the product is put together, and who should and should not be buying it. If action needs to be taken, it will be taken by incorporating protections in the suitability model, according to Voss.
Voss also is working on the development of a new version of the Authorization for Criminal History Record Check model act, also known as the fingerprint model act. The model stalled earlier this month when it did not receive a motion to advance through the NAIC. Voss says she is working on a new draft now but could not offer specifics on it. But she did say that it “will not look like the previous model.”
Important issues for the “D” committee will be creating more uniformity among states in the producer licensing process and streamlining market conduct annual statements, she says.
For instance, Voss says, different states have different requirements established by the state secretaries. And, in the case of the market conduct annual statement, the way that data is keyed in can have an impact on the number of complaints for a specific kind of problem. For example, she asks, “Is a complaint an auto complaint or a medical complaint that is associated with an auto insurance complaint?”
Insurers and consumer advocates will be offering their own input into these issues.