State insurance regulators will demand disclosure in plain language that beneficiaries of insurance products can “receive the entire death benefit in a single cash payment” in future regulation of retained asset accounts, the National Association of Insurance Commissioners (NAIC) says.
A priority is that in any future regulation, “Any communication about benefits sent to the beneficiary of a life insurance policy should clearly communicate that option,” the regulator group said.
The regulators’ plans were disclosed in a statement for the National Underwriter prepared by the NAIC’s Washington office. The NAIC will “examine all aspects” of retained asset accounts, the statement also said.
Lead regulators on the retained-asset issue are Jane Cline, West Virginia insurance commissioner and NAIC president, and Susan Voss, Iowa commissioner and incoming NAIC president.
The Washington office, in consultation with the commissioners, said the NAIC will take up the issue at its summer meeting in Seattle next week and that a first step will be distribution–possibly within a few weeks–of a consumer alert now being drafted.
In the statement, the commissioners said their priority “will be to make sure that the consumer retains solvency and guaranty fund protections. We wouldn’t want any regulatory action to separate these accounts from the rigorous solvency protections we require of insurers. We’re paying close attention to how these accounts are reported through the financial filing process and looking to see if more can be done with their oversight.”
The NAIC acted in the wake of heated criticism of the accounts by some state officials, the chairman of the House Veterans Affairs Committee, the Veterans Administration and the secretary of the Department of Defense. Even the White House has chimed in.
New York Attorney General Andrew Cuomo has launched an investigation into the accounts and subpoenaed the records of MetLife Inc., New York, and Prudential Financial Inc, Newark, N.J., dealing with the information.
He is also seeking information on their products from Genworth Financial Inc., Unum Group, New York Life Insurance Co., Northwestern Mutual Life Insurance Co., Guardian Life Insurance Co. of America and an insurer acquired by France’s Axa S.A.
In addition, Sen. Charles Schumer, D-N.Y., and Rep. Debbie Halvorsen, D-Ill., have announced plans to introduce legislation that would set new rules for the accounts.
Connecticut attorney General Richard Blumenthal also voiced concern about the programs, calling them “unfair to consumers.”
He asked state insurance commissioner Thomas Sullivan to take immediate action to increase regulation of the products.
At the same time, the commissioners said they would not act precipitously, a point that Connecticut insurance commissioner Sullivan made clear in response to a request from Blumenthal July 30.
In their statement, the commissioners said “it’s very important that the NAIC and regulators gather all the facts.”
The statement said it would “not serve consumers or the industry to opine or provide statements not based upon law or actual facts.”
The NAIC “takes this issue seriously and has already had a series of discussions with commissioners and have asked legal staff as well as financial staff to review the issues raised by the media,” the statement added.