• Wisconsin Task Force
• William SNELL. Northwestern Mutual - In Wisconsin in July 1977, the state held a hearing on the NAIC Model Life Insurance Solicitation Regulation.
  • Most people present suggested that it be adopted. Nothing happened until May 1978, when a new regulation was released for hearing in June.
    • That regulation was drastically different from the NAIC model. It would require a different buyer's guide.
      • It would have also required that the rate of return be provided at the end of 5, 10, 20, and 30 years.
      • ⇒ Also a preliminary policy summary was to be given out at the time of sale which would include only the surrender cost index.
      • The policy summary would only mandate the surrender cost index, but other data, such as the net payment index, could be provided if so desired.
  • After lengthy hearings during the summer of 1978, the regulation was promulgated mandating the surrender cost index starting January 1,1979.
  • Since the rate of return would not have been required until January 1, 1980, a special task force was set up by then Commissioner Wilde to examine this in more detail. The charge was to examine the following:
    • 1. The relationship between the Linton yield and the surrender cost index and the unique values of each for purposes of understanding and comparing the costs of life insurance products.
    • 2. The possibility of giving meaning and context to the surrender cost index which would provide it with independent significance and make it unnecessary to use a rate of return index.
    • 3. The assumptions and context which should be prescribed for all insurers to follow if a rate of return index is to be used, either for cost comparison purposes, or to provide a measure of investment "yield" which is not subject to misrepresentation.
  • I am chairman of that task force.
    • Other members are Donald Maier of Metropolitan, Bill White of Connecticut General, Steve Rieth of Aid Association for Lutherans, Brad Gile of the Wisconsin Insurance Department, and originally Bill White of the American Council of Life Insurance (ACLI).
      • In July 1979, Tony Spano replaced Bill White as ACLI's representative.
      • In addition, John Lounds of Allstate has attended most meetings.
    • We have met monthly since November 1978, with a break in the summer.
  • The Wisconsin Insurance Department sent a questionnaire to all companies licensed to write insurance in Wisconsin.
    • That questionnaire solicited data on both whole life and economatic plans for issue ages 25, 35, 45, and 55, and for amounts of $2,000, $I0,000, $25,000, $50,000, and $I00,000.
    • The data included premiums, dividends, and cash values for the first 20 years, except for one cell which provided data for the first 30 years.
  • About 290 companies provided data for at least one cell.
    • We at Northwestern Mutual Life are in the process of drafting a report on the results based on suggestions from the task force.
    • We hope to have a report in rough form for the task force in early January 1980.
      • After revisions are made, the report should be released to the Commissioner in March 1980.
      • In addition to keeping the state of Wisconsin informed of our progress, we are also reporting to the C(3) Cost Comparison Committee chaired by Mrs. Erma Edwards of Nevada.

1979 - SOA - Cost Disclosure (Moss Report), Society of Actuaries - 18p