1981-2

  • For example, the survey of 15 insurers conducted by the Council shows that during the first 4 months of 1981, gross loans made averaged slightly more than $600 million per month, somewhat less than the same period in 1980 but substantially higher than the same period in 1979.
  • These periodic spurts of borrowing have caused serious problems for life insurers, their policyholders and the economy.
  • Enactment of the model bill by the states should alleviate these problems in the future.

1981-2, NAIC Proceedings

  • We have simply got to quit addressing problems which have no solutions.
  • The things that have been debated for twenty years, and I'm not going to pick on the people that have an interest in this, but I'm going to tell you part of my campaign platform to run as-on the next agenda.
  • We took two quotes from the interview study to capture these two basic regulatory philosophies.
    • One we labeled the agent, and the quote I think is significant: "It is my opinion that the regulator should represent the public interest and not the insurance industry; I don't believe, as the insurance industry does, that there should be a position which is the arbiter between the industry and the public." About a third of the commissioners identified with this regulatory philosophy.
    • Another two-thirds of the commissioners identified with the arbiter philosophy of regulation: "We seek to develop a relationship of trust between the public and ourselves, between ourselves and the

1982-2, NAIC Proceedings

  • PERCEPTIONS AND ASSESSMENTS OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS: A PRELIMINARY SUMMARY - (p954-)
  • NATIONAL SURVEY OF STATE INSURANCE COMMISSIONERS PRELIMINARY RESULTS, January 1981 - (p962-)
  • THE "AGENT" AND THE "ARBITER": TWO IMPORTANT ACTORS ON THE REGULATORY STAGE, by Robert H. Miles Arvind Bhambri, Harvard Business School. - (p991-)

1981-2

  • Life insurance companies are running over themselves in their efforts to design more innovative and flexible products.
  • Marketing schemes that were heretofore reserved for cosmetic salesmen are being used in life insurance with unparalleled success. (p7)

Hon. William H.L. Woodyard III, Arkansas Insurance Commissioner.}
PRESIDENTIAL ADDRESS ANNUAL MEETING OF THE NATIONAL ASS0CJATI0N OF INSURANCE COMMISSIONERS - June 8, 1981 - Detroit, Michigan

1981-2, NAIC Proceedings

15. NASAA/NAIC Joint Committee

  • The revised report of the NASAA/NAIC Joint Regulatory Products Study Committee was adopted as amended (Attachment Two).
  • The amendment substituted a resolution for the position paper adopted by the Joint Committee in Phoenix (Attachment Two-A). 

* join with 1982-1 - STATEMENT OF THE AMERICAN COUNCIL OF LIFE INSURANCE BEFORE THE NASAA/NAIC JOINT REGULATORY INSURANCE PRODUCTS STUDY COMMITTEE
August 31, 1981

1981-2, NAIC Proceedings

POSSIBLE CHANGES IN SOME SECTIONS OF THE LIFE INSURANCE BUYER'S GUIDE

  • The suggested changes to the buyer's guide (Attachment One-B2) incorporate several new ideas.
  • Since that time, the Academy committee has been developing improved versions of its suggestions to the NAIC.

1981-2, NAIC Proceedings

ATTACHMENT ONE-A1

ADVISORY COMMITTEE ON POLICY LAPSATION, June, 1981, PROPOSED LAPSE DISCLOSURE SYSTEM -- FEASIBILITY TEST AND PROCEDURES SYNOPSIS

  • The (C3) Cost Disclosure Task Force accepted the initial report of the NAIC Advisory Committee on Policy Lapsation covering a lapse disclosure system, and then asked the advisory committee to proceed to test the technical adequacy of the proposal.
  • Questionnaires were developed by the advisory committee for the purpose of collecting industry lapse data and auxiliary information.
  • In the fall of 1979, the questionnaires were mailed from the NAIC Central Office to 1,100 life insurance companies.
  • Following are the main findings and recommendations from the information received and the tests made of the proposed system.

1981-2, NAIC Proceedings

  • These include policies under which the cash value is credited with interest at a guaranteed rate (e.g., 3.5% or 4%), plus excess interest and whose pricing reflects term rates which can be increased up to a guaranteed maximum.
  • If these policies turn out to qualify in tax treatment as permanent life insurance -- rather than as a term plus annuity combination -- the regular life insurance cost disclosure rules should apply.
  • This would include NGE's based on the difference between (1) cost indexes based on the guaranteed minimum interest rate and maximum term rates; and (2) cost indexes based on currently illustrated interest rates and term rates.

1981-2, NAIC Proceedings

Definition of "Lapse"

There is a wide variety of definitions of lapsation in existence in the insurance industry today.

  • This variation is bound to increase over the next few years as traditional products become superseded by new flexible products with indexed protec­tion, stop and go features, and other flexible options, and as companies define lapse on these products without respect company industry standards.

For traditional life insurance products, the interest in lapsation is usually in premium-paying policies.

  •   In this case, lapsation is often considered to be the cessation of premium payments for any reason other than death, maturity, expiry, transfer to an automatic premium loan status, or reaching the end of the stipulated premium-paying period.

1981-2, NAIC Proceedings

NAIC Mission, Objectives and Priorities

  • The committee spent considerable time deliberating the NAIC mission, objectives and priorities using the memorandum from the president and the chairman of the Executive Committee as the basis for discussion (Attachment Nine-A).
  • During the discussion, a series of motions was adopted.

1981-2, NAIC Proceedings

  • Varying Gross Premium Plans" topic in the June 1980

The following other life insurance topics are closely related to this topic:

  • "Revision of the Standard Valuation Law and the Standard Nonforfeiture Law for Life Insurance;"
  • "American Academy of Actuaries Subcommittee, Organization and Membership;"
  • "Other Special Life lnsurance Plans;" and
  • ''Variable Life Insurance and Variable Annuities."

There is also a potential relationship to the life insurance topic "Matching of Assets and Liabilities, and Minimum Surplus" and the "joint" topic "Companies Earning Lower Interest Rates than the Rate Assumed in Their Reserves" - especially in connection with the ''indexed" plans.

1981-2, NAIC Proceedings

1981-2 NAIC Proc.

  • ... estate. Each of these products-variable annuities, variable life insurance, universal life ,

adjustable life, indeterminate premium policies, deferred annuities contracts--has a different ..

1981-2 NAIC Proc.

  • ... Law for Life Insurance" and "Completely Flexible Life Insurance Plans (Universal Life
    Insurance Plans)." 6. Variable Life Insurance and Variable Annuities The ...
    ... charge for this subcommittee. 4. Completely Flexible Life Insurance Plans (Universal Life
    Insurance Plans) This topic was discussed under the topic heading ...
    ... closely related to the topic "Completely Flexible Life Insurance Plans (Universal Life
    Insurance Plans)." This topic is also closely related to the ...
    ... Actuaries subcommittee to study the topic "Completely Flexible Life Plans (Universal Life
    Insurance Plans)." For additional information on these related topics, please ...
    ... Discussion of Life Actuarial Guidelines" and "Completely Flexible Life Plans (Universal Life
    Insurance Plans)" in this section of this report....
    ... Actuaries subcommittee to study the topic "Completely Flexible Life Plans (Universal Life
    Insurance Plans)." For additional information on these related topics, please ...
    ... Discussion of Life Actuarial Guidelines" and "Completely Flexible Life Plans (Universal Life
    Insurance Plans)" in this section of this report. Attachment 17 ...
  • 1981-2 NAIC Proc. 
    ... rate of return cost disclosure system and the new product "universal life " creates new
    problems. Richard Minck of the American Council