The ‘mix and match’ of policy forms was just one of several points examined by the Interstate Insurance Product Regulation Commission in an effort to get companies to begin filing products through the centralized product approval body.
Discussions took place during the summer meeting of the National Association of Insurance Commissioners here.
During its development and as work on filling in details continues, life insurers say they are committed to using it, but have questions about its operations that are giving them pause.
The commission wants to see products starting to be filed soon so the IIPRC will become self-sustaining, said Fran Arricale, IIPRC executive director. IIPRC Chair and West Virginia Insurance Commissioner Jane Cline noted that while “this is a start-up and there may be some bumps in the road,” there is interest among companies in using the commission.
Michael Lovendusky, a representative of the American Council of Life Insurers, Washington, noted that a number of companies have devoted “tremendous resources” to making the commission’s operation a reality.
Indeed, the commission approved a motion to expose policy standards for a 60-day exposure. These include individual joint last-to-die survivorship endowment, individual single premium joint last-to-die survivorship endowment, and the individual flexible premium deferred variable annuity (with separate and general accounts).
But Lovendusky said there are still a lot of questions that need to be answered, including the commission’s fee schedule and its examination and actuarial staff. Additionally, he said a motion to amend the ‘mix and match’ provisions would have “tremendous implications” for insurers.
["Mix and match" would allow insurers to use state product filings and commission filings in different combinations.]
That motion, which was adopted unanimously by the commission’s product regulation committee, was advanced by the Pennsylvania and Washington departments.
In a May 11 memorandum used as part of the discussion, it was noted that Pennsylvania and Washington were joined by Ohio and Vermont, which indicated that “they have no objection to these changes in substance.”
Require insurers to provide compacting states with informational copies of the combined forms upon request.
Permit a compacting state to make a standing request for such copies so that companies routinely submit documents.
Clarify that the commissioner of a compacting state has the authority to prohibit the sale of combination forms if the combination results in ambiguous, unfair, inequitable or misleading clauses.
Clarify that certification from the company does not create a presumption that the combination is compliant and does not prevent the commissioner of a compacting state from prohibiting the use of the combined form when a conflict is identified.
During the discussion, Beth Berendt, Washington’s deputy commissioner, said the amendments would accomplish 2 things: allow consumers and consumer advocates to look at the whole filing, and allow state regulators to determine if the filing has any conflicts with state requirements and to say that filing will not work in their state.
On the issue of filing fees, a proposal is being readied that suggests a $5,000 annual fee and a $500 fee per filing. A one-year study will be undertaken to examine the feasibility of a flat filing fee. IIRPC’s Arricale emphasized that this was just a proposal and not a final determination. When asked if the filing fee would include an application and any accompanying riders or just the policy app, she said those are the very types of issues that need to be discussed further.
Other issues raised included language in the policy standards that some feel would restrict the right to assign a contract. Joshua May, a representative of Coventry Financial, questioned the inclusion of language he maintained would restrict consumers rights.
ACLI’s Lovendusky said “this was a resolved issue,” and “there are interested parties with other interests that are irrelevant to the commission’s goals.”