Producer licensing reciprocity and easing of accelerated death benefit rules are two of the issues surfacing at the National Association of Insurance Commissioners Life Insurance and Annuities Committee.
Kentucky Insurance Commissioner Julie McPeak, chair of the committee, talked about the committee’s agenda here Sunday at the annual conference of the American Council of Life Insurers, Washington.
It has been an “interesting year” for the committee, said McPeak, who took over as chair of the Life and Annuities Committee from James Poolman, the former North Dakota commissioner.
McPeak said she is excited about getting the Interstate Insurance Product Regulation Commission up and running and cutting approval times for some products to less than 30 days.
But fees at the IIPRC may be “a little bit steep, I think, for smaller companies,” McPeak said.
Meanwhile, in the area of producer licensing, “the industry doesn’t think we’re doing so well at reciprocity,” McPeak said.
To learn why agents and others think state producer licensing systems are diverging, the NAIC, Kansas City, Mo., intends to “go in and take a state-by-state look” at the licensing process “from point A to point Z,” McPeak said.
States may be following the letter of the licensing laws, but some may be weakening uniformity by seeking additional information from potential licensees, McPeak said.
Discussing the NAIC’s new viatical settlements model law update, McPeak said the revised model would impose a 5-year ban on “a very limited group of transactions” that the NAIC feels require extra scrutiny.
“We all know there are completely appropriate life settlements, completely appropriate premium financing and completely appropriate life insurance products,” McPeak said.
But regulators do want to root out the transactions that could cause problems, McPeak said.
So far, she said, regulators in 13 states have talked about plans to take up the viatical model act during their legislative sessions.
Kentucky will not be one of those 13 states.
NAIC rules require commissioners to work to get approved model laws enacted.
McPeak said she recommended that Kentucky Gov. Ernest Fletcher, R, include adoption of the NAIC’s viatical model update in his legislative package.
But “I don’t make the decision of what becomes a part of the legislative package,” McPeak said.
The NAIC Life and Annuities Committee could create a separate model in response to a request by a life insurer that wants to compete with the life settlement firms by offering a “souped up accelerated death benefit,” McPeak said.
Today, one state is ready to approve the accelerated death benefit expansion, but about 30 other states have laws prohibiting life companies from making policy loans or giving a policyholder more than the surrender value of the policy.
“I think that the fix is going to be relatively easy,” McPeak said. “What won’t be easy is determining the consumer protections.”
Also during the ACLI conference, McPeak said the Life and Annuities Committee will:
- Consider whether and how life insurers can use information about legal foreign travel and travel plans in underwriting.
Committee members have drafted two separate travel underwriting models. “I don’t think we’re going to have a unanimous vote,” but the Life and Annuities Committee probably will come out with a single proposal, McPeak said.
- Look into marketing of annuity products to seniors and the use of professional designations.
The NAIC’s current, relaxed approach to allowing use of designations is no longer viable in the Internet age, McPeak said.
“There’re a lot designations you can get for $149.99 and an online application, and you might even get a book with your name on it that says you’re an expert on senior issues,” McPeak said.