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Insurers Seek 'Mix and Match' For Compact Product Filings

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With the June target date for the Interstate Insurance Product Regulation Commission to start accepting product filings fast approaching, discussions are focusing on how to encourage companies to use the commission.

A couple of ideas were broached during the spring meeting of the National Association of Insurance Commissioners here. “Mix and match,” a concept that would allow companies to use state product filings and commission filings in different combinations, was discussed by commission members. This means that if a product form already existed in a state and a form for a rider were filed with the commission, a company could ‘mix and match,’ or vice versa.

Another idea that insurers raised was the creation of group standards in addition to the individual standards that are being established.

On the ‘mix and match’ issue, commissioners questioned where authority would rest if an issue arose in which both state and commission product filings were used.

Nebraska Director Tim Wagner also raised the issue of Commission fees and whether a ‘mix and match’ program would reduce filing revenue.

Ohio Director Mary Jo Hudson said that perhaps the ‘mix and match’ concept could be used for a limited transition period, such as 2 years, until there is a full complement of forms available through the Commission.

The ‘mix and match’ concept was not envisioned when the Commission was being created, according to Frances Arricale, executive director of the IIPRC, Washington. However, she said the Commission would look at the industry suggestion.

When the Commission was formed, she continued, the agreement was that it would be revenue neutral so that it would not reduce filing fees that states receive. The Commission is currently working on a fee structure, Arricale adds.

Industry representatives spoke about why companies need this option.

‘Mix and match’ is necessary because it is “very unlikely” that there will be a full complement of commission policy forms available for file by the June target date for startup, said Michael Lovendusky, a representative with the American Council of Life Insurers, Washington.

But eventually, as more policy forms become available through the Commission, ‘mix and match’ will be less of an issue, added Miriam Krol, representing the ACLI on Commission issues. Many companies have several filings that they could make if ‘mix and match’ is allowed, she said.

Every company has a different schedule for introducing products, so being able to mix and match commission and state forms is important to companies, said Dennis Herchel, a representative with Mass Mutual, Springfield, Mass. Herchel emphasized that the industry is committed to the Compact Commission, noting that it would not have spent so much time on its development if it didn’t intend to use it.

ACLI’s Lovendusky said that without ‘mix and match,’ there will be no revenue stream because carriers will not use it. But if they can use it, he maintains there should be no constraint to revenue growth as more products are filed with the Commission.

More products will be filed with the compact as group standards are developed by the Commission, said ACLI’s Krol. She said it should be relatively simple, in many cases, to take current individual product standards and change some of the concepts to fit group insurance products.

Speaking of the Commission’s June start-up target date, Brendan Bridgeland, a representative of the Center for Insurance Research, Cambridge, Mass., and a NAIC funded consumer representative, said: “We are at a crossroads. We still have great hope for the Compact.”

Bridgeland noted the newness of the system and said that potential benefits include more uniform standards.

As the details of the Commission continue to be developed, he said, greater transparency is needed. For instance, Bridgeland said that currently, information is not public on unapproved product standards. However, after the product standards are approved by the Commission, they are public.

On ‘mix and match,’ Bridgeland said that it could undercut the Commission, affecting uniformity and raising the issue of whether the Commission or the states has jurisdiction.

Under current rules, he said, if a filing was made with the Commission and it did not look like approval would be given, it could be withdrawn and then filed with a state and no one would know.

‘Mix and match’ needs to have clear guidelines, he added, such as a 2-year sunset clause.


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