NAIC Responds To Consumer Advocates

The NAIC letter also discusses the merits of the viatical model, noting "many important consumer protection issues" including a 5-year limitation on certain sales of life insurance policies and enhanced disclosure requirements.

Groups including the American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., support the model.

Birny Birnbaum, an NAIC funded consumer rep and executive director of the Center for Economic Justice, Austin, Texas, said the NAIC response really does not answer questions posed by the consumer reps' letter. And, he said, consumer advocates did not support the 5-year ban on the sale of a life insurance contract nor the "laundry list" of disclosure requirements as presented because the way it was set up would not clarify the transaction for consumers. He added that consumer reps did not feel the model addressed stranger-owned life insurance, a transaction where a third party pre-arranges to buy a policy solely for gain.

Additionally, Birnbaum says, the NAIC is again discussing a major policy issue, a conflict of interest policy, behind close doors, preventing input from constituents.

Bill Newton, an NAIC funded consumer and executive director of the Florida Consumer Action Network, Tampa, Fla., also said he would have liked to see the process be more open. He said it was good that allegations are being addressed and is looking forward to seeing the results.

Doug Head, executive director of the Life Insurance Settlements Association, Orlando, Fla., said review of the NAIC's conflict of interest policy is a good thing for the NAIC. He noted the concerns that had been raised with the model and the request of stakeholders including the National Conference of Insurance Legislators, Troy, N.Y., to defer adoption of the model.