WASHINGTON BUREAU – A new special working group at the National Association of Insurance Commissioners (NAIC) will examine use of retained asset accounts (RAA) to pay life insurance claims.
The RAA working group will convene for the first time Sunday in Seattle, at the NAIC’s summer meeting, officials say.
Roger Sevigny, the New Hampshire insurance commissioner and immediate past president of the NAIC, Kansas City, Mo., will co-chair the working group.
Thomas Sullivan, the Connecticut commissioner and chair of the NAIC Life Insurance and Annuities Committee, will be the other co-chair.
Other members of the working group will be members of the Life Insurance and Annuities Committee and the Market Regulation and Consumer Affairs Committee, according to NAIC President Jane Cline, the West Virginia commissioner.
The working group will focus on RAA consumer issues.
“We want consumers to have as many choices as possible in how they receive their claims payments, but we also want to make certain the terms of those payments are fully disclosed in language that is clear and easy to understand,” Cline says.
While the working group is looking at RAA consumer issues, another arm of the NAIC, the Financial Condition Committee, will address RAAs by considering changes in life product reporting requirements, Cline says.
RAAs are special accounts life insurers use to hold beneficiaries’ benefits until the beneficiaries withdraw the cash using checks, payment cards or other means.
Critics say life insurers earn high returns on the cash and pay beneficiaries low rates without giving the beneficiaries adequate notice that the cash is held in something other than a bank account insured by the Federal Deposit Insurance Corp. (FDIC).
Supporters say RAAs give grieving beneficiaries a chance to deal with their emotions before addressing financial concerns, and that funds guaranteed by an insurer may be safer than bank deposits insured by the FDIC.