A high-level panel at the National Association of Insurance Commissioners has approved a proposal that could require annuity sellers to review the financial needs of young annuity purchasers.
The NAIC’s Life Insurance and Annuities Committee voted here at the NAIC’s spring meeting to approve a proposal to change the Senior Protections in Annuity Transactions model regulation.
The amended model would require annuity sellers to check all prospective buyers’ finances to see whether proposed annuity purchases seem to be suitable for those buyers.
The current version of the model requires suitability reviews only for prospective buyers age 65 and older.
The NAIC’s executive committee and a body that represents all voting members of the NAIC, Kansas City, Mo., still must approve the proposed model change before it can take effect.
The Life Insurance and Annuities Committee also approved proposed amendments to the Life Insurance and Annuities Replacement model regulation. The amendments would exempt a financial services company that is converting term life policies issued by one corporate affiliate onto paper written by another corporate affiliate. Consumer advocates have been asking whether affected consumers will get enough information about the conversions. Insurers say the amendments will affect only conversions of policies with expired terms, not replacements of in-force policies.
Meanwhile, the Life & Health Actuarial Task Force meeting reviewed a proposal to create a temporary life reserving model to fill in the gap while regulators discuss a possible shift to a more flexible, “principles-based” reserving system.
The American Council of Life Insurers, Washington, has proposed a compromise that would include new preferred mortality tables based on existing tables along with a mechanism for insurers to incorporate lapse rates into reserve calculations for universal life policies with secondary guarantees.
At the spring meeting, the LHATF asked actuaries to review preferred actuarial tables developed by the ACLI, but it rejected the proposal to include projected lapse rates in the UL secondary guarantee reserving formula.