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January 13, 2008 at 02:00 PM
An internal investigation into the approval process related to the adoption of the Viatical Settlements model act by the National Association of Insurance Commissioners, Kansas City, Mo., found that the process used by the group of state regulators passed muster, said a law firm retained by the NAIC.
“The model was accorded open debate and unbiased consideration and that the adoption of the model act by the NAIC’s Life Insurance and Annuities “A” Committee was unbiased and not subject to undue or improper influence,” NAIC said.
“We were confident going into the review that the model amendments had been subjected to thorough and open debate, and we have been looking forward to confirmation of those facts. We can now focus on getting this model introduced and adopted by the states,” said NAIC President and Kansas Insurance Commissioner Sandy Praeger in a statement.
The investigation was conducted by the Kansas City, Mo.-based office of Bryan Cave. The outside firm interviewed all 12 members of the “A” Committee which developed the model, according to Scott Holeman, an NAIC spokesperson. The outside firm “reviewed the process–to see if it was 1) open and deliberative and, 2) that members made decisions based on information received from all sides,” he added. But, at press time it had not been confirmed what other “relevant documents” in addition to meeting minutes had been used in the review.
Trade groups contacted by National Underwriter said they had not been interviewed for the internal investigation.
At press time, Lynn McCreary, a firm partner who headed up the investigation could not be reached for comment.
The issue was brought to light in a letter from NAIC-funded consumer representatives dated Sept. 24, 2007. The letter strongly criticized the closeness of some commissioners to the industry, including former North Dakota Commissioner Jim Poolman.
In particular, the letter cited questions regarding Poolman’s oversight of the development of the Viatical Settlements model act as well as concerns about his hope to find a job in the industry. Additionally, attachments to the letter raised concerns over campaign contributions made while Poolman was chairman of the “A” Committee overseeing the process.
In a statement, Poolman, now running his own consulting business based out of Bismarck, N.D., said, “I am glad this whole episode is over, and I am not surprised with the results. I have always known there were no conflicts of interest. This is something just ginned up by those in the viatical settlement industry who don’t want to be further regulated. I am disappointed by their tactics, but it comes with the territory. There was a lot of hard work and effort put into this legislation by many, and I am glad that I and the process have been vindicated.”
Life settlement and life financing representatives see the model’s development and the ensuing investigation differently.
The partner chosen to head up the investigation is a former Met Life employee, says Doug Head, executive director of the Life Insurance Settlement Association, Orlando, Fla. Among her other credentials, McCreary’s biography says she was previously vice president of MetMor Financial, a mortgage subsidiary of Met Life, New York. Head questioned whether someone who came out of the life insurance industry could look impartially at the issue.
He also noted that in the NAIC’s record of model acts, pre-2004 there are 30-35 pages of records on the viatical model but post-2004, there is one line describing work that is being done on the model.
