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March 05, 2006 at 02:00 PM
It is still open to question whether tighter wording in a proposed change to a replacement model regulation will ease concerns expressed by consumer advocates regarding regulatory oversight of term conversions among corporate affiliates.
The concern focuses on a proposed change to the Life Insurance and Annuities Replacement model regulation, first adopted in 1997 by the National Association of Insurance Commissioners, Kansas City, Mo.
The model was developed in response to questions that arose during the mid-1990s about how major companies replaced contracts. The broad intent of the model was to establish guidelines that would control the replacement process.
The model language says that the model does not apply when “an application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner.”
An NAIC working group agreed to add the specific language “or when a term conversion privilege is exercised among corporate affiliates.”
The Life Insurance and Annuities “A” Committee is expected to take the matter up during the spring NAIC meeting in Orlando when it meets on March 5.
The changes were advocated by MetLife also to exempt term conversions within the same corporate family given the consolidation taking place in the industry. Indeed, MetLife is part of that consolidation trend having, in the last decade, absorbed New England Financial, General American Life Insurance Company and, most recently, Travelers Life & Annuity.
The change also has the support of the American Council of Life Insurers, Washington; the Life Insurers Council, Atlanta; and Prudential Financial, Newark, N.J., as well as others.
