1980s – NAIC – Insurance Regulators – Snippets

  • The FTC efforts to deter state action on life insurance cost disclosure, under the guise of assisting the states, when in fact, the game plan was to initiate an FTC regulation on the basis that the states failed to act, might be described as a federal fraud.
    • 1979 – FTC – Report – Life Insurance Cost Disclosure, Federal Trade Commission – 460p

1980-1, NAIC Proceedings – 1979 1203 – Wesley J. Kinder, California Insurance Commissioner, Vice-Presidential Address – re: FTC Report – (p8-13) / (p63-68)

  • So I think that the NAIC is going to have to relook at the whole issue of life cost disclosure.
    • It is an issue that will not go away.
    • ⇒  As long as the internal benefits of a policy are not reflected in the premium, people need help in measuring those benefits.
    • ⇒  That is, in a nutshell, what cost disclosure systems have tried to do. (p10-11)

—  Susan Mitchell, Wisconsin Commissioner of Insurance

1981 0921 –  GOV (House) – Insurance Agent Commission Deregulation – [PDF-109p-GooglePlay, VIDEO-?] –

  • As you know, revolutionary changes are taking place in the life insurance business.
    • To a large extent, these changes have passed regulators by, and have left the regulators in a position of trying to catch up.

—  J. Alan Lauer, Pennsylvania, Deputy Insurance Commissioner, Actuary

1983-1, NAIC Proceedings

  • Statement on Behalf of the National Association of Insurance Commissioners – Submitted to the Senate Committee on Banking, Housing and Urban Affairs
    • …..on the Integration of Financial Services, By Bruce W. Foudree Insurance Commissioner of the State of Iowa and Chairman of the NAIC Integrated Financial Services Task Force – (p90-

1983-2, NAIC Proceedings

  • Now we want to make sure that the consumers are treated fairly and reasonably and have sufficient information upon which to make a decision.  (p318)

—  James P. Corcoran, Superintendent of Insurance, State of New York

1984 0411, 0503, 0510, 0628, 0913 – GOV (House) – Competition in the Insurance Industry, Peter W. Rodino, Jr. (D-NJ) – [PDF-755p-GooglePlay]

  • If we want to address the problems in the insurance industry, I strongly urge that a federally chartered insurance corporation be set up, along the same lines of the FDIC, to monitor this industry.
  • Indeed, if you think that the property/casualty crisis is difficult, I can assure you that the same crisis will come home, in spades, with the life insurance industry in approximately three to five years and it is not too late to address that crisis. (p761)

—  Michael A. Hatch, Commissioner, Department of Commerce, State of Minnesota,

1986 0225 – Letter to Senator Dale Bumpers (D-AR), Includes Letter to Governor Perpich, From Michael A. Hatch Commissioner, re: Insurance Unavailability Crisis- (p761-770)

1986 Part 2 0220 and 0221 – GOV (Senate) – The Cost and Availability of Liability Insurance for Small Business, Parts 1, 2, and 3, Jim Sasser (D-TN) – [PDF-1163p-GooglePlay-link]

  • On reinsurance, in 1984 we passed a new act on reinsurance in terms of what has got to be put up from the unauthorized reinsurers to insure that there are some funds available, in case those insurers disappear.
    • We have taken action on reinsurance.  
    • We have taken additional action because we see it as a problem that is starting to emerge, and a problem we would like to get a handle on. 

—  John Washburn – Illinois Insurance Commissioner – 11/1/1983 – 9/1/1989

1986 0618 – NAIC / GOV – Edward Muhl (MD) and John Washburn (IL) – Insurance company solvency [draft] – 53p

  • The life insurance industry is currently facing challenges in many fronts.
    • These challenges, if not properly met, could easily lead to financial problems for many companies.
  • Within the last decade, life insurance companies have increased their sales of products that are sensitive to the interest rate environment.
    • Examples of such products are universal life, single and flexible premium deferred annuities, guaranteed interest products and current assumption life insurance.
      • During rising interest rate environments, policyholder demands for high yields can result in policyholders surrendering their contracts.
      • Life insurance companies which have not adequately positioned themselves for this event might be forced to liquidate their assets and experience capital losses.
  • On the other hand, in declining interest rate environments, insurance companies attempt to maintain their crediting rates on their interest sensitive products.
    • This can lead to companies decreasing and, even in some cases,eliminating their profit margin.  (p4-5)

1986 0619 – NAIC / GOV – Edward Muhl (MD) – Reliability of the Institution of Insurance as to Financial Solidity and Solvency –  20p

  • Sometimes it is the same with insurance departments.
    • If you like the idea, go ahead and do it.
    • I think that is what the New York State Insurance Department did with Regulation 126, and I think that that is what the Department is doing with Regulation 130 regarding investments in high-yield, high-risk obligations by domestic life insurance companies. [Junk Bonds]

—  Robert J. Callahan, Fellow of the Society and has been with the New York State Insurance Department for over 35 years.

1987 – SOA – Quantifying The C-1 Risk (Defaults in Fixed Dollar Investments and Market Value Changes in Equity Investments), Society of Actuaries – 32p

  • Commissioner Hager of the Universal & Other Plans (A) Task Force stated that there appeared to be disclosure problems with universal life plans and that the identification of these items should be placed on the Actuarial Task Force agenda.
    • The members present agreed that the disclosure issues extended to variable life as well as universal life.
    • The main concern was that an unsophisticated buyer purchased a policy and did not know what the coverages, benefits and limitations were.
    • It was suggested that Sections 8 and 9(f) of the Universal Life Insurance Model Regulation needed considerable expansion. It was suggested that disclosure requirements be placed in the illustrations section of the models as well as in the contract itself.
    • Some of the items identified which should be disclosed:
      • (1) what is guaranteed versus what is not;
      • (2) adequate disclosure of the fact that a premium quoted will not support the contract for the whole life if the policy is a universal life policy;
    • (3) disclosure of the guaranteed surrender values on a flexible premium policy.

1988-2 – NAIC Proc.

We cannot play word games with policyholder money. (p74)

—  Karl L. Rubenstein, Special Deputy Insurance Commissioner, State of California

1988 0914 and 0915 – GOV (House) – Insurance Company Failures, John Dingell (D-MI)   —   [BonkNote]

  • I think the proposals for tort reform currently being debated by Congress misses the point.
    • I frankly think that “tort reform” is an attempt by the insurance industry to finger point the blame for its own mismanagement on the judicial system.

—  Michael A. Hatch, Commissioner, Department of Commerce, State of Minnesota,

1986 0225 – Letter to Senator Dale Bumpers (D-AR), Includes Letter to Governor Perpich, From Michael A. Hatch Commissioner, re: Insurance Unavailability Crisis- (p761-770)

1986 Part 2 0220 and 0221 – GOV (Senate) – The Cost and Availability of Liability Insurance for Small Business, Parts 1, 2, and 3, Jim Sasser (D-TN) – [PDF-1163p-GooglePlay-link]