ACLI - 2020s - Snippets

  • 2020 0107 - WSJ - It’s the Hottest Thing in Life Insurance. Are Buyers Aware of the Risks? Regulators worry insurers are underplaying the dangers of a product tied to the performance of the U.S. stock market, by Leslie Scism - [link]
    • One concern is that existing consumer materials “can lead to unrealistic expectations,” said Fred Andersen, an actuary with the Minnesota Department of Insurance who is a leader in the effort at the National Association of Insurance Commissioners.
    • ⇒ Paul Graham, chief actuary with trade group American Council of Life Insurers, said the industry supports development of materials and disclosures that help consumers “make the right decisions,” though “we do have different views amongst our companies as to how to best accomplish that on rather complex IUL products.”
    • Some regulators and advisers fear indexed universal life will offer a repeat of what many consumers experienced with a policy known as basic universal life.
      • Those policies were a sensation in the 1980s when U.S. interest rates were in double digits.
  • TPAs and MGAs - We also question the usefulness of collecting information concerning MGAs and TPAs.
  • Insurers are ultimately responsible for the actions of these entities, who can provide a wide variety of services.

2020 0821 - Letter - ACLI to NAIC (MCASWG - Market Conduct Annual Statement Blanks Working Group (D)) - re: RE: Accelerated Underwriting & TPAs/MGAs - 3p

  • The ACLI’s Dolan says the size of the premium depends on the returns on the options in the policy.
    • “The fact is, in a different (and better) economic environment, less in premiums would be paid than originally planned,” he notes.
    • “Owners of this product must be aware of exactly how it works, because, unlike certain other types of life insurance, IULs have a fluctuating component to them.”

2020 0923 - Forbes - Sounding The Alarm On Indexed Universal Life Insurance - [link]

  • 2020 / 2021 - IAIS - Resolutions to Public Consultation Comments on Development of Liquidity Metrics: Phase 1 – Exposure Approach, 9 November 2020 – 9 February 2021 - 106p
    • 235. ACLI - American Council of Life Insurers:
      • The Consultation seems to acknowledge that the protection purpose for which a policy is purchased plays an important role in the risk of surrender, yet the methodology contains no classification by product type that would incorporate this important factor.
      • This would need to be remedied if the ILR is to provide a meaningful assessment of an insurer’s liquidity risk.
  • Universal life insurance:  A type of permanent life insurance that allows the insured, after the initial payment, to pay premiums at various times and in varying amounts, subject to certain minimums and maximums. To increase the death benefit, the insurance company usually requires the policyholder to furnish satisfactory evidence of continued good health.
  • Also known as adjustable life insurance. (p192)
  • Adjustable life insurance:  A type of life insurance that allows the policyholder to change the plan of insurance, raise or lower the policy’s face amount, increase or decrease the premium, and lengthen or shorten the protection period.  (p177)

2021 - ACLI Fact Book - 234p

  • 2021 0805 - LIAC - NAIC - ACLI - RE: Life Insurance Illustrations Issues (A) Working Group - 3p
    • As a result, the Working Group tried to address an unknown problem, which is impossible to do. 
    • To the contrary, the ACLI believes the working group explorations were a success.
      • No regulator found fault with the sample policy summaries provided by the ACLI to the working group in 2016; the reasons for the traditional business practice of providing consumer disclosures at time of policy delivery – and especially the importance of the Free Look Period – were remembered; and the importance of agents and financial advisors in helping consumers select the most appropriate plan of life insurance and explain policy features was appreciated anew.
  • (p8) - LIIIWG Next Steps Summary Comment Chart
    • Question 1 - Do you support the development of a short policy overview document for the working group to achieve its charge? Yes or No.
    • ACLI - NO - The working group has fulfilled its charge.
      • The Working Group was created from concerns raised when the Indexed Universal Life (IUL) Illustrations (A) Subgroup under the Life Actuarial (A) Task Force was working on guidance for IUL policy illustrations that would result in consumers being better able to understand the product performance and interest variability of IUL products.
      • A review of sample disclosures for all types of life insurance policies revealed that additional disclosures to those now required are likely to confuse consumers, which would be the opposite of the Working Group’s goal.
      • Moreover, the additional disclosures could create liability traps for insurers regarding required versus supplementary disclosures and undermine well respected NAIC models enabling the availability of affordable insurance protection to millions of Americans.

2021 0811 - NAIC Proceedings - LIAC - Life Insurance (A) Committee - Summer National Meeting - 43p

  • 2022 0407 - 2022-1, NAIC Proceedings -  LIAC - Life Insurance (A) Committee
  • 3. Heard a Federal Update on the Implications of the DOL Fiduciary Rule - Brooke Stringer (NAIC)
    • Patrick C. Reeder (American Council of Life Insurers—ACLI) said a fiduciary standard is not a bad standard, and it is an appropriate legal standard for situations where there is an ongoing relationship providing financial advice.
      • He said the problem with the DOL proposal is that it is a fiduciary-only approach, which would eliminate commission-based sales; i.e., the way that lower and mid-range clients buy products.
      • He said the DOL should recognize the changes that have taken place since 2017.
      • He said both the SEC’s Regulation Best Interest standard and the NAIC best interest revisions to the Suitability in Annuity Transactions Model Regulation (#275) provide a strong standard of care that is vigorously enforced.
      • He said state insurance regulators have a strong story to tell, and the DOL needs to hear from the NAIC.