ORLANDO, FLA.–A standing-room-only crowd filled the hearing room Monday as regulators discussed recommendations for handling retained asset accounts (RAAs).
The Retained Asset Accounts Working Group at the National Association of Insurance Commissioner (NAIC), Kansas City, Mo., held a session here at the NAIC’s fall meeting. The RAA working group was established in August, during the NAIC’s summer meeting in Seattle.
The group is trying to adopt a model bulletin that would clarify RAA disclosure rules.
An RAA is a method of paying life insurance benefits through a vehicle that resembles a checking account rather than sending the beneficiary a check for the whole amount.
Critics say RAAs often pay lower interest rates than bank accounts and are not insured by the Federal Deposit Insurance Corp. (FDIC).
Supporters say RAAs pay rates comparable to the rates provided by other safe, highly liquid accounts, are backed by state insurance guaranty funds, and give grieving beneficiaries time to postpone making complicated financial decisions.
During the hour-and-a-half meeting yesterday, regulators tried to determine how to clarify what information consumers need to know to help make a decision and what the language should be to achieve that goal.
New Jersey Insurance Commissioner Thomas Considine revised a motion instructing the working group on what the next steps would be at least 4 times before the members of the joint working group could agree to adopt it.
During the discussion, Rhode Island state Rep. Brian Patrick Kennedy, D-Hopkinton, R.I., appearing on behalf of the National Conference of Insurance Legislators, Troy, N.Y., said NCOIL is working on model legislation aimed at greater disclosure and explanation of how the RAA works.
NCOIL’s position sparked a discussion between Kennedy and Connecticut Insurance Commissioner Thomas Sullivan, co-chairman of the committee, over whether a law or bulletin would better guarantee universal implementation.