The National Association of Insurance Commissioners has adopted new versions of its suitability model for annuities and a model audit rule designed to strengthen corporate governance.
These and other models were adopted by the NAIC’s executive committee and plenary during its summer meeting here.
The Senior Protection in Annuity Transactions Model Regulation, also known as the Suitability model regulation, was originally adopted to focus on sales of annuities to those aged 65 and over, explained North Dakota Insurance Commissioner Jim Poolman. The model now covers all consumers, according to Poolman, chair of the NAIC’s Life & Annuities “A” Committee.
The association’s executive and plenary also adopted the Life Insurance and Annuities Replacement model regulation. Poolman said the model addressed internal conversions of term insurance policies of affiliated companies in the same insurance group, treating them as internal conversions in one company rather than conversions to completely different companies.
Other models that were adopted include the Variable Annuity model regulation, which reflects changes to the Standard Nonforfeiture Law, and Actuarial Guideline ABC. which addresses determining the nonforfeiture rate, minimum nonforfeiture benefits and establishing interest rates when a benchmark is used.
Executive and plenary also adopted the Model Audit Rule, which regulators had argued for the past 2 years would strengthen corporate governance and offer regulators another regulatory tool for financial oversight. The model applies to life, health and property-casualty insurers.
The model incorporates some of the concepts of the Sarbanes-Oxley Act and makes changes to internal control procedures.
The new rule has an effective date of 2010. For companies with $300 million to $500 million in direct and assumed premium, half of the board would have to be independent. For those companies with over $500 million, 75% of the board would have to be independent.
Among the other models that were adopted was the Prevention of Illegal Multiple Employer Welfare Arrangements and Other Illegal Health Insurers model regulation and the Health Policy Rate and Form Filing model act and regulation.
Also adopted was the Authorization of Criminal History Record Check model act. The model would make it easier for states to gain access to criminal history records from federal authorities when checking insurance agent backgrounds, according to Susan Voss, Iowa insurance commissioner.