Members of the National Association of Insurance Commissioners have voted here at the group’s summer meeting to adopt several new models, including a revised annuities suitability model and a model audit rule.
The original Senior Protection in Annuity Transactions Model Regulation, also known as the Suitability model regulation, focused on sales of annuities to consumers age 65 and over.
The revised model covers all consumers, according to North Dakota Insurance Commissioner Jim Poolman, chair of the NAIC’s Life & Annuities Committee.
The NAIC also adopted the Life Insurance and Annuities Replacement model regulation.
The replacement model addresses term insurance conversions involving affiliates in the same insurance group. The model treats those conversions as transactions involving a single company rather than as transactions involving completely different companies, Poolman says.
The full NAIC membership also has adopted the Model Audit Rule, which would change financial reporting requirements for life insurers that are not subject to the reporting rules governing publicly traded companies.
The Model Audit Rule applies to life insurers, health insurers and property-casualty insurers.
The Model Audit Rule incorporates some of the concepts of the Sarbanes-Oxley Act and makes changes to internal control procedures.
Steve Broadie, vice president-financial legislation and regulation with the Property Casualty Insurers Association of America, Des Plaines, Ill., says the model achieves “internal controls and corporate governance without unnecessary reporting requirements on insurers.”
The new rule has an effective date of 2010. For companies with $300 million to $500 million in direct and assumed premium revenue, half of the board would have to be independent. For those companies with over $500 million in premium revenue, 75% of the board would have to be independent, Broadie says.
Neil Alldredge, senior director of state advocacy for the National Association of Mutual Insurance Companies, Indianapolis, says that NAMIC continues to oppose the model and that “it is a long way from being over.” He says NAMIC now will focus on reaching out to state legislators.
Still other models adopted include a Variable Annuity model regulation, which reflects changes to the Standard Nonforfeiture Law; the Prevention of Illegal Multiple Employer Welfare Arrangements and Other Illegal Health Insurers model regulation; the Health Policy Rate and Form Filing model act and regulation; and the Authorization of Criminal History Record Check model act.
The criminal history record check model will help states get criminal history records from federal authorities, according to Susan Voss, Iowa insurance commissioner.