The National Association of Insurance Commissioners’ ‘A’ committee will tackle a number of issues this year, including reciprocity issues between the states and proposals to better allow life insurers to compete with the secondary market, according to Kentucky Insurance Commissioner Julie McPeak.
Speaking at the American Council of Life Insurers’ annual conference here, McPeak said it has been an “interesting year” for the committee. One of the more “exciting” things, she said, has been getting the interstate compact “up and running” to better allow for product approvals. With the compact, she explained, companies can receive approval for products within 30 days, and potentially less.
Although she acknowledged that the fees involved may be “a little bit steep, I think, for smaller companies,” McPeak said she thought the overall value of being able to obtain multiple state approvals through one filing would be worth it.
On another multi-state issue, producer licensing, McPeak acknowledged that “the industry doesn’t think we’re doing so well at reciprocity.” To fix the problem, she said the NAIC intends to “go in and take a state-by-state look” at the licensing process “from point A to point Z.”
While McPeak said she believed the letter of the law was being followed by states, she speculated that some may be seeking additional information from potential licensees that could be the source of the problems.
Another of the issues that has been passed by the NAIC is the updated viatical model law, which she noted would impose a 5-year ban for “a very limited group of transactions” that the NAIC feels require greater scrutiny. “We all know there are completely appropriate life settlements, completely appropriate premium financing, and completely appropriate life insurance products,” she said, but regulators are only looking to root out those combinations of the three that may cause problems.
So far, she said, 13 states “that we’ve heard from so far” intend to take up the viatical model act in their legislative session.
Kentucky, however, will not be among those states. NAIC rules require commissioners to work to get approved model laws enacted, and while McPeak said the viatical model was among those issues she recommended Governor Ernie Fletcher include in his legislative package, “I don’t make the decision as to what becomes a part of the legislative package.”
The committee, however, is not done with life settlement issues, she said, as an insurance company has filed a request with a state to offer what McPeak described as a “souped up accelerated death benefit” that would allow insurers to compete with the secondary market.