NAIC Committee OKs Suitability Expansion

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.