2023 0224 - LIAC - Life Insurance Committee - (A) - NAIC

  • 2023 0224 - LIAC - Life Insurance Committee (A) - NAIC  ---  [BonkNote]  ---  19p  ---  (p8-)
    • [A: NAIC Proceedings]
    • [B: Bonk: Not in NAIC Proceedings]
  • Rachel Hemphill - Quick Fix, Longer-term
  • 03:22 - Fred Andersen, Chair-IULSG-MN
    • What is "Sold"? - 
  • 06:00 - Birny Birnbaum, CEJ - Start Date for AG49, Abusive Illustrations, AG49 ---
    • Regulators have determined to be deceptive and abusive
    • AG49 not applied retroactively
    • illustrations - unfavorable.. un
  •  08:45 - Fred Andersen, Chair-IULSG-MN
  • - Retroactive - "Sold"  - Offer, Acceptive, Transfer for Consideration = Sold
  • 13:00 - Kim O'Brien - acceptance, Free-Look - Transfer of Consideration - Fred Andersen
  • [A: NAIC Proceedings]
  • Fred Andersen (Chair-MN) clarified that the revisions to AG 49-A arose out of a concern that there should be a level playing field between the illustrations of benchmark indices and non-benchmark indices, rather than the determination that the illustrations were misleading, per se.
    • Birny Birnbaum, CEJ - said that even if state insurance regulators have not explicitly said the illustrations were misleading, the fact that the guideline has been revised twice is an implicit acknowledgment that insurers have continued to use product design to game the illustration guideline.
  • [B: Bonk: Not in NAIC Proceedings]
  • Judith L. French, Chair-LIAC-OH -This is one step. I think it's a good one, but I think everybody agrees that there is more work to be done.  Birny, did you have a follow-up?
  • 10:30 - Birny Birnbaum, CEJ - -I did.  I certainly appreciate all the work the IUL Subgroup and LATF have put into this and I understand that they are grappling with a lot of issues having to deal with a lot of industry pushback.
    • - This Industry wants to continue to do what they are doing.
    • -  But respectfully, to say that this issue was discussed and settled at the IUL Subgroup or at LATF doesn't really provide much of a basis for this committee to decide whether that was a reasonable decision or not. 
    • - The reason that your committee approves this is that it's at the commissioner level and you look at the work of the working groups underneath you. 
    • - So, respectfully again, to say, well, it's worked out doesn't provide an explanation for why there is an absent of consumer protection for the policies that were issued prior to this and can continue to use illustrations that regulators have decided are inappropriate. 
    • - Thank You. I do recognize that further work is being done, but
  • 12:00 - Judith L. French, Chair-LIAC-OH
    •  Birny we always appreciate your perspective. 
    • - I think all of the commissioners here appreciate that it's our duty as A Committee members to approve the work and it is certainly not just a rubber stamp.
    • perhaps it's because I've had more contact with LATF and other subgroups.
  • 14:40 - 12:40 - Chat Box - [from Jules [Bonk] to Everyone - "Is Birny correct in saying that the regulators have found the illustrations to be misleading or whatever words he used? [pic-18:42]
    • Judith L. French, Chair-LIAC-OH - And I see a question in the chat.
      • - "Is Birny correct in saying that the regulators have found the illustrations to be misleading or whatever words he used?"
      • - There is a little bit of discussion happening in the chat. 
      • - Fred I don't know if you want to respond to that.
      • - I think our concern is to make sure that the illustrations are not misleading and to do what we can to keep ahead any actions to that effect.
    • Fred Andersen, Chair-ILUSG-MN - I would say that I don't think that the Subgroup opined on whether illustrations were misleading or not.
      • - It was mainly an attempt to level the playing field between these benchmark indices and the non-benchmark indices.
      • - We recognize that in some environments the non-benchmark indices may perform bettor and in other environments they may not perform better.
      • - We came to a decision that the playing field should be leveled between the two regarding illustrations. 
    • Judith L. French, Chair-LIAC-OH - Yes, Birny. A follow-up?
    • [Bonk: somebody said - "oh my gosh"]
    • Birny Birnbaum, CEJ - I don't really want to belabor this, but...
      • - .... the reason that LATF have made these changes or are proposing these changes is because the insurers have gamed AG 49 to produce illustrations that were inconsistent with the intent of the regulators drafting AG 49.
      • - And, of course, this is the third version of that because each version has been gamed by insurers to basically obstruct the intent of the Illustration guideline.
      • - So, although the regulators haven't specifically said these are deceptive and misleading.
        • The action by the regulators to change AG 49 means an acknowledgement that the insurers have, in fact, used product design to game the illustration guideline prior to this.
    • Judith L. French, Chair-LIAC-OH - Well, Birny, as always we appreciate your perspective, um, but that is, in fact, your perspective..
      • I just so appreciate the work of the subgroup trying to get ahead of any actions that could in fact be misleading. 
      • I think we have to remember to that as regulators we always have Market Conduct Reviews available to us. 
      • 17:23 - So, if for example I found those actions happening in Ohio, I would have Market Conduct available to me to check into whether, in fact, there is something that is misleading. 
      • motion
    • 18:52 - 12:17pm - Chat Box - from Tomasz Serbinowski to everyone - Actuary, Utah Insurance Commission
      • "I guess it is implied.  If the Illustrations were fine, why would they need to be changed?"
    • Judith L. French, Chair-LIAC-OH - Motion to Adopt