What You Need to Know
- The NAIC's Life Insurance and Annuities Committee is discontinuing the Retirement Security Working Group.
- The committee is looking for ways to reduce disparities in minorities' level of access to life insurance and annuities.
- The committee talked about the idea of asking about COVID-19 vaccinations in life insurance applications.
Members of the Life Insurance and Annuities Committee — an arm of the National Association of Insurance Commissioners — appear to be cool to the idea of forming a Life and Annuity Illustration Reengineering Working Group.
The committee talked about the illustration working group proposal Monday, during an online session that was part of the NAIC’s spring national meeting.
An illustration is “a presentation or depiction provided to prospective or new policy owners that shows how the policy should perform under specific circumstances set out in the illustration,” according to the NAIC.
Birny Birnbum, the executive director of the Center for Economic Justice, has argued that there are inexplicable differences between the illustration rules for indexed life insurance products and indexed annuity products, even though the products tend to accumulate value in similar ways.
Birnbaum also argued that the current rules encourage life insurers to game the system, and to design investment indexes in such a way that the illustrations can minimize the impact of down markets.
Doug Ommen, the Iowa insurance commissioner, said there is too little consensus among regulators on illustration issues for a working group to have much chance of producing useful results.
“There has to be sufficient commissioner and regulator support for the project,” Ommen said.
He agrees with Birnbaum on some points, and said that Iowa is starting to implement an NAIC annuity index illustration rules update, but he noted that only four states have adopted the annuity illustration rules update.
COVID-19 and Life Insurance
Regulators at the life and annuity session also talked about the impact of COVID-19 on the life insurance purchasing and underwriting process.
Elizabeth Kelleher Dwyer, the Rhode Island insurance commissioner, and Karen Schutter, the executive director of the Interstate Insurance Product Regulation Commission (IIPRC), talked about what the IIPRC is seeing and doing in that area.