Top officials at the National Association of Insurance Commissioners say they are addressing consumer advocates’ concerns about the process used to develop recent revisions to the NAIC’s Viatical Settlements Model Act.
Leaders at the NAIC, Kansas City, Mo., commented on the concerns Monday in a letter responding to 11 NAIC funded consumer representatives who wrote to the NAIC in September.
The consumer reps complained in the September letter about reports that David Poolman, the former North Dakota insurance commissioner and a leader in efforts to revise the model, may have had an undisclosed conflict of interest.
Poolman received a large campaign contribution from someone affiliated with the life insurance premium finance industry.
Poolman has denied doing anything wrong or having any conflicts of interest.
Life settlement and premium financing firm representatives say the revised Viatical Settlements model failed to deal adequately with the role of trusts in “stranger owned” life insurance arrangements, or efforts by investors to help consumers buy life insurance coverage in an effort to create policies that can be used in life settlement arrangements.
“The NAIC is aware that allegations have been made concerning conflicts of interest related to the revisions to the model,” NAIC officials write in their letter.
“The NAIC is addressing the allegations through appropriate channels and evaluating the available facts concerning these issues,” the officials write. “You should also be aware that, independent of any issues related to the model, the NAIC and its members are currently in discussions concerning revisions to the conflict of interest policy. These discussions are ongoing.”
In the letter, NAIC officials say the revised Viatical Settlements model includes new disclosure requirements and other new protections for consumers, including a 5-year limitation on the sale of some life insurance policies.
The NAIC has declined to comment on how allegations are being addressed or to provide details about the conflict of interest policy.
Birny Birnbaum, an NAIC funded consumer representative and executive director of the Center for Economic Justice, Austin, Texas, says the NAIC response does not answer the questions posed by the consumer rep letter.
Consumer advocates did not support the 5-year ban on the sale of a life insurance contract or the revised model’s approach to disclosure requirements, Birnbaum says.
In addition, consumer reps do not feel the model addressed stranger-owned life insurance, and they believe the NAIC should be discussing the conflict of interest policy in public, not behind closed doors, Birnbaum says.
Bill Newton, an NAIC funded consumer and executive director of the Florida Consumer Action Network, Tampa, Fla., says he would have liked to see the process be more out in the open.
It is very good that allegations are being addressed and “I am looking forward to seeing the results,” Newton says.