The Interstate Insurance Product Regulation Commission might prohibit term life policy provisions that limit holders’ ability to assign policies or transfer ownership.
Members of the IIPRC management committee talked about those IIPRC product standards committee proposals today during a meeting.
The IIPRC will expose the proposals and other term life proposals for comment and could vote on them during a Feb. 23 hearing.
The IIPRC also is preparing to release its proposed 2007 budget Tuesday, and it could consider the budget for adoption during the Feb. 23 hearing, officials say.
The IIPRC hopes to begin accepting product filings by June, officials said during the management committee meeting.
The IIPRC’s product standards committee dealt with term life transfer standards in a memorandum issued Friday.
One recommendation in the memorandum, Recommendation 17, addresses individual term life policy assignment standards, and another recommendation, Recommendation 21, calls for similar changes in individual term life policy ownership standards.
Product standards committee members recommend that the IIPRC adopt the following language for assignment and similar language for ownership: “The policy shall not condition the owner’s right to assign the policy upon the owner’s prior receipt of an offer from the company or an affiliate to purchase the policy.”
The IIPRC should “prohibit policy forms preventing the policy owner from assigning a policy unless the insurer is first allowed to submit an offer, because such a provision could have the effect of preventing or unreasonably delaying the transfer of ownership,” product standards committee members write in the Jan. 19 memorandum.
The product standards committee members also recommend making identical changes to standards for adjustable life insurance.
The IIPRC already has adopted adjustable policy life standards.
During the meeting held today, product standards committee representatives acknowledged Recommendation 17 and Recommendation 21 could be controversial.
Some members of the product standards committee do have concerns about the 2 provisions and feel that the additional language should be subject to consideration during a public exposure period, said Roger Sevigny, New Hampshire insurance commissioner and chair of the product standards committee.
Michael Lovendusky, associate general counsel with the American Council of Life Insurers, Washington, asked how the committee decided to make the recommendation.
The recommendation has not been discussed before, Lovendusky said.