CFA - Consumer Federation of America

Insurance is not a product like a can of peas.  (p23)

--  J. Robert Hunter, Director of Insurance, Consumer Federation of America 

2003 1022 - GOV (Senate) - Federal Involvement in the Regulation of the Insurance Industry, (CSPAN) - Insurance Industry Regulation, John McCain (R-AZ)

  • 3. Heard a Federal Update on the Implications of the DOL Fiduciary Rule - Brooke Stringer (NAIC)
    • Micah Hauptman (Consumer Federation of America—CFA) said there are gaps in the current regulatory framework.
      • He said he does not believe consumers’ reasonable expectations are being met.
      • He said the DOL should require a fiduciary duty, regardless of what products are being sold or how they are being sold.
      • He said consumers all expect and deserve high quality advice without the taint of conflicts of interest.

2022 0407 - 2022-1, NAIC Proceedings -  LIAC - Life Insurance (A) Committee

  • 1987 0716 - CFA - Report - Financial Planning Abuse: A Growing Problem, by Barbara Roper - <WishList>
    • 1987 0716 - The Journal News - Study: Financial Planning Abuse Growing - [CFA] - 
  • 2001 - CFA - Consumer Federation of America - Evaluating Cash Value Life Insurance Policies - "This document is an expanded version of remarks delivered by Mr. Hunt to the Financial Planning Association of Greater Hudson Valley on September 28, 2001." - 10p
    • A.L. Williams
  • 2004 0326 - Letter - CFA to GOV (Michael Oxley (R-OH) - Re Opposition to Insurance Road Map - 3p
  • 2016 0201 - Press Release - CFA Calls on State Insurance Commissioners to Stop Unfair Price Hikes in Universal Life Insurance [link]
    • 2016 0201 - CFA - Life Insurance Regulators Should Block Cost of Insurance Rate Increases When Used to Avoid Guaranteed Interest Rates in Universal Life Policies, By James H Hunt, F.S.A., Ret'd in Society of Actuaries, Consumer Federation of American - 5p
  • 2017 0731 - Letter - CFA to NAIC (Annuity Suitability Working Group) - re: Regarding “Best Interest” Amendments to the NAIC Suitability in Annuity Transactions Model Regulation - 5p
    • 1. The standard of care for consumers should be a fiduciary standard that obliges the insurer or producer to act in the best interest of the consumer.
    • 2. The best interest standard provisions must be stronger than the current suitability standard. Relabeling “suitability” as “best interest” would be a sham.
    • 5. The application of the enhanced model should be broadened to investment-type life insurance products. The same standard of care – best interest of the consumer – is clearly as appropriate for investment-type life insurance – for example, indexed universal life – as it is for annuity products. A uniform standard of care across all types of investment products means both consistent consumer protection and a level regulatory framework preventing one type of investment product from regulatory arbitrage.
  • 2018 0122 - Letter - CFA to NAIC - re: “Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation.” - 11p
    • The scope of the proposal is too narrow.
      • Another flaw of the NAIC proposal is its too narrow scope. NAIC’s proposed “best interest”
        standard applies only to annuities and applies only at the point of sale.
    • As you know, life insurance companies routinely sell certain types of insurance products, such as variable and indexed universal life insurance, based at least in part on their value as investment and savings vehicles. The following are just a few examples we found through a quick Google search:
    • We are not suggesting that these descriptions are misleading or deceptive. On the contrary, our point here is that these life insurance policies are marketed based on features that are virtually indistinguishable from the features of annuities.
    • Given these similarities, it makes no sense to adopt a best interest standard for one type of insurance investment, annuities, and exempt other types of insurance investments, variable and indexed universal life insurance, from that standard.
    • That is why, when we and others wrote to the NAIC last July, we urged the NAIC to include all insurance products sold as investments in any standard it adopts. As we wrote at the time, “The same standard of care – best interest of the consumer – is clearly as appropriate for investment-type life insurance – for example, indexed universal life – as it is for annuity products.”
      • 2017 0808 - ThinkAdvisor.com - Annuity Rules Should Apply to Investment-Type Life Products: Consumer Reps, By Allison Bell - [link]
  • 2019  0227 - Letter - CFA to SEC - re File No. S7-23-18, Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts - 13p
    • As a group of consumer representatives wrote in an earlier letter to the National Association of Insurance Commissioners (NAIC):
      • “Disclosures tend to be written, reviewed and approved by insurance subject matter experts – typically regulator or industry lawyers, actuaries and market regulation staff.
      • Few of these people have subject matter expertise in consumer readability, cognition, information biases or learning. Few have expertise in testing of consumer information and disclosures or training in these fields.
      • The results have often been a disclosure that is unhelpful to a consumer, but provides a liability shield for insurers.”17
      • 17 Letter from NAIC Consumer Representatives Brenda Cude, Birny Birnbaum, and Silvia Ye to members of the NAIC Executive Committee Task Force on Consumer Information, Education and Disclosure, Nov. 7, 2018. - <WishList>
    • Substitute securities for insurance in the above quote, and the same could be said for securities disclosures, such as the current proposal, that are designed for the retail market.
  • 2020 - CFA - How the Cash-Rich Insurance Industry Fakes Crises and Invents Social Inflation, Consumer Federation of American - 70p
  • 2021 0315 - CFA - CFA’s Plan for Improving Consumer Understanding of Life Insurance and Annuities Products and Strengthening Consumer Protections, Consumer Federation of American - 8p - [link]
  • 1988-2, NAIC Proceedings
    • The Consumer Federation of America (CFA) estimates that there may be between 250,000 and 400,000 people who call themselves financial planners.
    • The CFA released a study on July 16, 1987, entitled "Financial Planning Abuse: A Growing Problem" which identified three areas of financial planning abuse: (by Barbara Roper)
      1. ...  outright fraud, such as embezzlement and sale of abusive tax shelters;
      2. ...  self-interest, meaning the recommendation of products based on sales commission rather than the client's best interest; and,
      3. ...  incompetence, which was defined as a lack of comprehensive knowledge of the many areas included in a proper financial planning practice.
  • 1987 0716 - Washington Post - Financial-Planning Fraud Cost Consumers $500 Million, by Randolph E. Schmid - [link]