Cost Indices Subgroup - (A) - NAIC

  • Cost Indices Subgroup (A) of the Life Disclosure (A) Working Group - NAIC
  • The group first considered a suggestion from Chris Kite (FIPSCO) for a new type of index that would allow consumers to compare the assumptions in the illustration.
    • Mr. Kite said his index has the advantage of prompting the prospect to question assumptions used.
    • Delmer Borah (MassMutual) suggested that consumers are more concerned about total cost than assumptions. 
    • Brenda Cude (Cooperative Extension Service) opined that the target audience does not care about assumptions. (p931)

--  1996-3V2, NAIC Proceedings - 1996 0815 - Report of the Cost Indices Subgroup of the Life Disclosure (A) Working Group 

  • 1996-3v2, NAIC Proceedings
    • 917 - 3. Appropriate Use of Cost Indices in Sales of Life Insurance
    • Mr. [Tom] Foley said a subgroup had considered whether there was one cost index that would add to a consumer's ability to make an appropriate purchasing decision on life insurance.
      • The subgroup had concluded that there was not one superior cost index, but thought it was appropriate to allow the development of various indices.
      • Roger Strauss (Iowa) opined that it was not appropriate to specify any particular indices in the Life Insurance Buyer's Guide, but to briefly describe the purpose of a cost index.
        • He said that if an individual was interested in that type of information he or she would be aware of the need to ask more questions.
      • Mr. Foley asked Lester Dunlap (La.), chair of the Buyer's Guide Subgroup, if he considered that group's work to be finished.
        • Mr. Dunlap pointed out that the Life Insurance Buyer's Guide attached to the interim report had been revised to take into account the recommendations of the Cost Indices Subgroup and it was ready for adoption.
      • Steve Frankel (Northwestern Mutual Life) suggested a change to the paragraph on cost indices because he did not think the sentences described them accurately.
        • Mr. Dunlap suggested that a group draft language and present it for working group consideration after the break.
        • Mr. Foley reminded those in attendance that the Life Disclosure Working Group recommends that the policy summary required by some state regulations not be required if an illustration meeting the requirements of the Life Insurance Illustrations Model Regulation is being provided.
          • That would mean that the applicant would not have information about indices.
          • He asked if the Buyer's Guide would still be appropriate in that context and no objections were raised about the use of the proposed Buyer's Guide in that situation.
    • p931 - 1996 0815 - Report of the Cost Indices Subgroup of the Life Disclosure (A) Working Group - ATTACHMENT THREE-B1
      • The Cost Indices Subgroup of the Life Disclosure Working Group met by conference call on Aug. 15, 1996, to discuss the appropriate use of cost indices in the Life Insurance Buyer's Guide and broader issues regarding the use of cost indices.
        • The following regulators participated: Tom Foley (N.D.), Chair; Christian Uhlmann and Mae Gabor (Alaska); Frank Dino (Fla.); Lester Dunlap (La.); John Rink (Neb.); Tony Higgins (N.C.); Dan Keating (Okla.); and Ted Becker (Texas). 
      • The group first considered a suggestion from Chris Kite (FIPSCO) for a new type of index that would allow consumers to compare the assumptions in the illustration. The group reviewed comments in favor of and opposed to the method described by Mr Kite.
        • Mr. Kite said his index has the advantage of prompting the prospect to question assumptions used.
        • Delmer Borah (MassMutual) suggested that consumers are more concerned about total cost than assumptions.
        • Brenda Cude (Cooperative Extension Service) opined that the target audience does not care about assumptions.
        • Tony Higgins (N.C.) said he was unconvinced about the need for indices, seeing them as an intellectual exercise that would not benefit the public.
        • The consensus of the group was that none of the indices available are clearly superior at comparing policies in a meaningful way.
          • Some are so technical that consumers and maybe agents cannot grasp the nuances.
          • The subgroup decided to include only a general description in the buyer's guide and not to get into the technical aspects of the different indices.
        • Lester Dunlap (La.) asked that further comments on the guide be limited to the description of the use of cost indices (Attachment Three- Bla).
        • The group then looked beyond the immediate concern about what to put in the buyer's guide and considered the broader issues in the charge to the Life Insurance (A) Committee.
        • The group decided a good starting point would be to make a list of indices that were useful.