• With regard to the life nonforfeiture model, Ms. Lautzenheiser saw the main problem as the difference between the fund-based (universal life) policies and the non-fund-based products.
  • She said that minimum values should be set, not total values, which is rate regulation, and there should be common formulas for both fund-based and non-fund-based products and common assumptions and expense factors.

• Commissioner David Lyons (Iowa) convened the Life Insurance (A) Committee for the purpose of conducting a hearing on the Second Standard Nonforfeiture Law for Life Insurance and the Standard Nonforfeiture Law for Deferred Annuities. 
  • He said it had come to the attention of the regulators that there may be some flaws in these models that needed to be addressed, and he asked those commenting  to be specific about what needed to be changed, cautioning the speakers that if they were not, the Life and Health Actuarial (Technical) Task Force would not know how to make changes.
• Bill Carroll. (American Council of Life lnsurance-ACLI) said the ACLI did not believe the life insurance model should be adopted in its present form because it constituted rate regulation, especially in respect to non-traditional products, referred to as fund-based products.
  • [Bonk: fund-based products ≅ Universal Life]
  • He said he thought it created an uneven playing field between traditional and non-traditional products.
  • He said no testing had been done, and no standards have been developed by which one would know if the test passed or failed if one was done.
• Mr. Carroll also reminded the regulators of the importance of having uniform nonforfeiture regulation throughout the states and expressed concern that the possibility of this model being uniformly adopted was poor.

1994-1, NAIC Proceedings