Lawmakers present at a life settlement meeting organized by the National Conference of Insurance Legislators voted unanimously here to tell insurance regulators to hold off on updating their Viatical Settlements Model Act.
Members of the NCOIL executive committee then voted 24-2 to approve a resolution asking the National Association of Insurance Commissioners, Kansas City, Mo., to delay final action on any viatical model amendments until December 2007, after NCOIL completes its work on a life settlements model that addresses concerns about matters such as investor-owned life insurance.
Executive committee members rejected a substitute resolution proposed by Rhode Island state Rep. Brian Kennedy, D-Hopkinton, R.I. Kennedy suggested removing the request that the NAIC delay action and simply noting that NCOIL was addressing life settlements issues in its own model.
The NAIC’s Life Insurance and Annuities Committee recently sent a viatical model update up to the NAIC’s executive committee.
The model probably will go before both the NAIC’s executive committee and its plenary – the body that includes all voting NAIC members – later this week in New York at the NAIC’s own spring meeting, Kentucky Insurance Director Julie McPeak said here at the NCOIL meeting.
McPeak, chair of the NAIC’s Life and Annuities Committee, said the update will address banking groups’ concerns about the possibility that the current update draft might illegally restrict legitimate lending transactions.
The NAIC may avoid adding language regulating investor-owned life insurance placed in trusts because of concerns that adding a trust provision would slow adoption of the model update, McPeak said.
Speakers at the NCOIL executive committee meeting noted that NCOIL has to address life settlement issues quickly because state legislatures are starting to consider bills based on the NAIC model.
The North Dakota Senate already has voted unanimously to pass a bill based on the NAIC model, speakers here said.
But NCOIL executive committee members were eager to emphasize that the ultimate authority over life settlements lies with elected legislators, not with insurance regulators.
“Is the NAIC making suggestions as to what it feels is best for legislators?” Georgia state Sen. Ralph Hudgens, R-Comer, Ga., asked McPeak after she talked about NAIC viatical model activities.
Some NCOIL executive committee members asked whether NAIC model efforts to restrict use of life settlement arrangements are fair to consumers.
The current NAIC model includes a “moratorium” that would require many consumers who buy life insurance policies with borrowed money to hold the policies for 5 years before selling the policies through life settlement transactions.