Life Insurance Illustrations Model Regulation - LIIMR - 582 - NAIC

  • Life Insurance Illustrations Model Regulation - LIIMR - 582 - NAIC Proceedings - Citations  ---  [BonkNote]
  • George Coleman, Prudential, ACLI, TRG-Technical Resource Group for the NAIC (Industry Advisory Group - Illustrations)
    • Obviously, this isn't the first time the industry and the regulators have become involved in disclosure and with illustrations.
      • The NAIC models are replete with examples of actions taken to regulate the form of disclosures to consumers, the Model Disclosure Act, Life Disclosure Act, the Advertising Regulation, guidelines on marketing to seniors.
      • There are guidelines on variable products that people aren't very familiar with, and any number of such proposals.
    • The engine for the current effort at the NAIC, which I was involved in from the start or almost from the start, were hearings conducted by Senator Metzenbaum in the fall of 1992.
      • Those hearings focused on problems that were occasioned by the use of some abbreviated payment plans.
      • The concern was that, with the declining interest rates, policies were failing to abbreviate or vanish, as some people call it.
      • There was an expectation perhaps on the part of some consumers that they would vanish in all events at the end of six years or seven years or whatever, and that wasn't happening.

1994 - SOA - Problems and Solutions for Product Illustrations, Society of Actuaries - 28p

  • The whole process started in the NAIC, as it had to.
  • If radical changes in the way we illustrate policies were going to be made, they had to start at the NAIC.
    • The NAIC was only too well aware of the fact that sales illustrations were the subject of innumerable abuses and they wanted to correct those abuses.
    • Furthermore, the NAIC was being pushed by Senator Howard Metzenbaum who wanted to accuse the regulatory structure of not doing its job and then to bring regulation up to the federal level." 

--  Frank S. Irish, ASB, Actuarial Standards Board

1997 - SOA - Professional Standards Affecting Life Actuaries, Society of Actuaries - 18p

  • James D.  ATKINS: The NAIC has proposed a life insurance illustration regulation. The draft I have is dated April 21, that's fairly recent.  I hope you've had a chance to look it over.
    • I'd like to start out by posing a question and that is, what is the impetus behind introducing this illustration regulation?
      • Why are we doing this?
  • Robert Wilcox (Utah Insurance Commissioner and Chairman of the Life Disclosure Working Group - NAIC): Efforts began in the NAIC to look at the quality of the illustrations as the investment market turned steeply downhill and premiums that were supposed to vanish didn't.
    • That put tremendous pressure on the companies and on the regulators of the companies to look at this particular issue.
    • If you look at last week's copy of the National Underwriter, there was word of a lawsuit, actually two or three lawsuits, that had been filed over the issue of reappearing or nonvanishing premiums.
      • That points out the initial problem.
    • Whatever we did to illustrate those contracts when they were sold, the policyholders did not understand the contingent nature of that vanish.
      • That's the underlying reason we got into this.
  • James D. ATKINS: You mean just because they didn't understand the vanishing premium illustration we have all this regulation being imposed?

1995 - SOA - Current Developments Surrounding Regulations and Standards of Life and Annuity Products, Society of Actuaries - 18p