1994 0308 – NYT – Regulators Seek Limits on Insurer Sales Pitches, by Michael Quint

  • 1994 0308 – NYT – Regulators Seek Limits on Insurer Sales Pitches, by Michael Quint  —  [BonkNote]  —  [link]
    • NAIC, Illustrations, NALU
  • State insurance regulators are moving closer to sharply limiting how sales agents may describe the future benefits of life insurance policies, despite strong objections from insurance companies and agents.
  • The rule is intended to curb the widespread use by agents of computer printouts of insurance policy benefits that exaggerate how the policy’s value grows as the company pays dividends to the holder. When interest rates declined in the last five years, many projections made in earlier years proved to be far too optimistic.
  • The insurance commissioners are not expected to recommend the proposal as a law that states should pass until June.
  • But for now, Mr. Lyons said, “the public’s and the politicians’ perceptions of sales abuses have been so raised that people are ready to accept more radical approaches.”
  • Insurance companies have, however, persuaded regulators to change some parts of the proposed rules. One idea, to give consumers the right to sue insurance companies about misleading sales tactics, has been deleted.
  • [NALU – NAIFA] – William N. Albus, senior general counsel for the National Association of Life Underwriters, which represents life insurance sales agents, said illustrations of future benefits “are essential to explaining how a policy works.”
    • He suggested that agents should be allowed to project current dividends into the future and include an example of how a policy would look if its dividends were reduced by one percentage point.

2022 0603 - Retirement Income Journal - NAIC Reassures Congress on Private Equity-Led Insurers, By Kerry Pechter

2022 0603 - Retirement Income Journal - NAIC Reassures Congress on Private Equity-Led Insurers, By Kerry Pechter  ---  [BonkNote]  ---  [link]

  • In the 14 years since the Great Financial Crisis, there's been a surge of capital from powerful investment companies like Blackstone, Apollo, and KKR into the annuity business-all eager to manage the tens of billions of dollars in Americans' savings that life/annuity companies hold.
  • News of those concerns recently reached the Senate Banking, Housing and Urban Affairs Committee, which Brown chairs.
    • In March, he sent letters to the NAIC and the Federal Insurance Office asking to be briefed on the matter. The NAIC's response arrived on May 31, the deadline requested by Brown.
  • "State insurance regulators are fully capable of assessing and managing the risks of these insurers, and there is nothing PE firms add to the playing field that changes this fact.
    • It should provide you and the public comfort to know the state insurance regulatory system has already been working on many of the concerns that you and others have highlighted, and we possess the tools and resources to address these issues," the letter said.
    • NAIC CEO Michael F. Consedine, president Dean L. Cameron of Idaho and three NAIC officials signed the letter.
      • It focuses on life/annuity company solvency as the core issue.
  • The risky assets include collateralized loan obligations (CLOs), which resemble the collateralized debt obligations (CDOs) at the center of the 2008 financial crisis.
  • But the NAIC sees no cause for alarm.
    • "However, while the relative size of this asset class for the sector has been growing, it represents only 2.6% of total cash and invested assets at year-end 2020, and most of the investments held by the industry are of a higher quality.
    • The NAIC has performed multi-scenario stress tests on industry CLO portfolios and closely monitors their performance."
  • But some followers of these matters were rankled by what they perceived as the letter's "nothing to see here" tone.
    • "The response is certainly no surprise," said Tom Gober, a Virginia-based forensic accountant who has documented the tens of billions of dollars of annuity liabilities that a handful of PE-led annuity issuers have reinsured offshore, often with affiliated reinsurers.
      • "The NAIC's leaders apparently huddled around and threw a bunch of points at Brown that, in a vacuum, sound fine.
        • But when you are familiar with the details, the letter is mainly fluff, and grossly inadequate.

TNEC – Temporary National Economic Committee

  • 1938-1941 – GOV (Senate) – TNEC – Temporary National Economic Committee, Joseph C. O’Mahoney (D-WY)  —  [BonkNote]
  • 1941 – GOV (Senate) – TNEC – Final Report and Recommendations of the Temporary National Economic Committee, Investigation of Concentration of Economic Power – 464p
    • (p269) – Life insurance funds are not venture capital; they are seeking safe, long-term investments, preferably the bonds of well-established enterprises or ….
  • Dr. Dewey Anderson, executive secretary of the Temporary National Economic Committee

Company Computer Systems

  • 1992 0929 – Montreal Life Insurance company destroyed by computer errors?, by Peter Deutsch – The Risks Digest Volume 13: Issue 21 – p238-239 – 952p

Agency Law

  • 2024 0209 – FSRA – [2023-015] – Comments – Consultation for Proposed Guidance on Life Insurance Agent & MGA Licensing Suitability  —  [BonkNote]
    • CLHIA – Canadian Life and Health Insurance Association – Lyne Duhaime – [FSRA-2023-015] – 2024 0223 – 10p
    • Reliance on Agency Law falls short:
      • In practical terms, the vast majority of MGAs operate independently and support the distribution of insurance products of a variety of insurers.
      • Very few insurance distribution participants have a model that approximates one in which apparent authority could possibly be found.
      • FSRA’s reliance on agency law to deem a principal-agent relationship to exist “in certain circumstances” is a response suited to the distribution model contemplated by the Insurance Act of the 1990s, when insurers almost exclusively sold products through a career salesforce.
      • If FSRA is looking for greater authority to regulate MGAs, which life insurers support, the proper forum to acquire that authority is in legislation.

2022 0510 – Letter – IMG to FTC – Integrity Marketing Group – Deceptive or Unfair Earnings Claims – [2022-0020-1575]

  • 2022 0510 – Letter – IMG to FTC – Integrity Marketing Group – Deceptive or Unfair Earnings Claims – [2022-0020-1575]  —  [BonkNote]  —  [16p-link]
    • Authority – Actual Authority, Apparent Authority
  • (p2) – Integrity’s nearly 5,500 employees work with more than 420,000 independent agents and advisors who serve over 10 million clients annually.
    • In 2021, Integrity helped carriers place more than $7 billion in new sales and oversaw more than $20 billion of assets under management and advisement through its RIA and broker-dealer platforms. 
  • While Integrity has a wide network of partners and independent agents, it has very little control over the day-to-day activities of the independent agents.
  • (p14-15) – Importantly, courts have held that the FTC may hold companies liable for actions taken by individual agents if the agents act “within the actual or apparent scope of [their] authority.” Goodman v. Federal Trade Commission, 244 F.2d 584, 592 (9th Cir. 1957).
    • Here, individuals who post about their own earnings (which can come from multiple sources because they are independent contractors) on social media do not act within the actual or apparent scope of Integrity’s authority or any other third-party company with which they may be contracted.
    • Individual agents do not have actual authority to broadcast earnings claims on behalf of Integrity.
    • Actual authority “exists only where the agent may reasonably infer from the words or conduct of the principal that the principal has consented to the agent’s performance of a particular act.” Id. (citing Restatement § 7 cmt. b) (emphasis added).
      • Integrity has not consented to agents’ discussions of earnings on social media.
  • Nor do individual agents have apparent authority when they post on social media.
    • “Apparent authority arises from the written or spoken words or any other conduct of the principal which, reasonably interpreted, causes [a] third person to believe that the principal consents to have [an] act done on his behalf by the person purporting to act for him.” Dinaco, Inc. v. Time Warner, Inc., 346 F.3d 64, 69 (2d Cir. 2003) (quotation marks and citation omitted).
    • —  Tiktok —
    • And when an individual posts about her personal experiences on her own social media account, a viewer generally does not attribute those posts to anyone else. Indeed, precisely for that reason, the FTC has strict rules requiring advertisement disclosure so that users can learn who is sponsoring a particular post. Disclosures 101 for Social Media. Without these rules, a viewer would not attribute a post to a corporate sponsor but rather to the individual. See id.
    • Because agents have neither actual nor apparent authority to post earnings claims on social media, FTC should not-and cannot-hold Integrity (or any third-party company that the agents may be doing business with) liable.

Apparent Authority

  • 2018 – LC – Ciofoletti v. Securian Fin. Grp.  —  [BonkNote]
    • No. 0:18-cv-03025-JNE-ECW (D. Minn.) – filed in federal court in St. Paul, Minnesota
    • Doc 138 – Transcript – June 23, 2020
      • p27 – It’s Vacura v. Haar’s Equipment, Inc. It’s cited in the notes to this Jury Instruction, 364 N.W.2d 387 at 391, Minnesota Supreme Court 1985.
      • And the Court says, well, apparent authority is usually based on some affirmative action on the part of the principal.
      • ⇒ Authority may be found when the agent has regularly exercised some power not expressly given to it and the principal knowing of the practice tacitly sanctions its continuance.
        • And that’s where we’re at here.
  • 2024 0209 – FSRA – [2023-015] – Comments – Consultation for Proposed Guidance on Life Insurance Agent & MGA Licensing Suitability  —  [BonkNote]
    • CLHIA – Canadian Life and Health Insurance Association – Lyne Duhaime – [FSRA-2023-015] – 2024 0223 – 10p
      • Reliance on Agency Law falls short:
        • In practical terms, the vast majority of MGAs operate independently and support the distribution of insurance products of a variety of insurers.
        • Very few insurance distribution participants have a model that approximates one in which apparent authority could possibly be found.
        • FSRA’s reliance on agency law to deem a principal-agent relationship to exist “in certain circumstances” is a response suited to the distribution model contemplated by the Insurance Act of the 1990s, when insurers almost exclusively sold products through a career salesforce.
        • If FSRA is looking for greater authority to regulate MGAs, which life insurers support, the proper forum to acquire that authority is in legislation.

Authority

  • 2018 – LC – Ciofoletti v. Securian Fin. Grp.  —  [BonkNote]
    • No. 0:18-cv-03025-JNE-ECW (D. Minn.) – filed in federal court in St. Paul, Minnesota
    • Doc 138 – Transcript – June 23, 2020
      • p27 – It’s Vacura v. Haar’s Equipment, Inc. It’s cited in the notes to this Jury Instruction, 364 N.W.2d 387 at 391, Minnesota Supreme Court 1985.
        • And the Court says, well, apparent authority is usually based on some affirmative action on the part of the principal.
      • ⇒ Authority may be found when the agent has regularly exercised some power not expressly given to it and the principal knowing of the practice tacitly sanctions its continuance.
        • And that’s where we’re at here.

2023 0317 – FTC – Consultation – Trade Regulation Rule on Unfair or Deceptive Fees – FTC-2023-0064

  • 2023 0317 – FTC- Consultation – Trade Regulation Rule on Unfair or Deceptive Fees – FTC-2023-0064  —  [BonkNote]
    • ftc.gov/legal-library/browse/rules/rulemaking-unfair-or-deceptive-fees
    • Regulations.gov – [link]
      • Comments – 3.3k – [link]
    • Federal Register – [link]
    • SUMMARY: The Federal Trade Commission (“FTC” or “Commission”) recently published a notice of proposed rulemaking (“NPRM”) in the Federal Register , titled “Rule on Unfair or Deceptive Fees,” which would prohibit unfair or deceptive practices relating to fees for goods or services, specifically, misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The NPRM announced the opportunity for interested parties to present their positions orally at an informal hearing. Seventeen commenters requested to participate at the informal hearing. The Commission’s Chief Presiding Officer, the Chair, has appointed an Administrative Law Judge for the Federal Trade Commission, the Honorable Jay L. Himes to serve as the presiding officer of the informal hearing.
    • DATES
      • COMMENTS must be received on or before:  January 8, 2024.
      • HEARING DATE: The informal hearing will be conducted virtually on April 24, 2024, at 10 a.m. Eastern.
  • [Comments – 3.3k – [link]
  • AFSA – American Financial Services Association –
    • AFSA Comment on FTC Unfair and Deceptive Fees NPRM FINAL – combined (1)_Redacted
      • AFSA agrees with the FTC that hidden and misleading fees harm consumers. Our members want their customers to understand the costs of products and services and to be able to compare costs with those charged by other providers.
    • However, the proposed rule is flawed. To begin with, the underlying construct supporting this proposed rulemaking seems to be the belief that all transactions have a finite all-in cost that can be readily disclosed. That’s simply not true. Some products, like mortgage loans, are complicated and there isn’t one number that conveys the cost and can be disclosed upfront in an advertisement. In other instances, the consumer’s needs may change or not be known when the contract is entered into.
  • ALTA – American Land Title Association –
    • ALTA_FTC Unfair and Deceptive Fees_Comment Letter_2_7_24_Redacted
    • While the American Land Title Association1 (ALTA) supports thoughtful and targeted efforts to protect consumers from deceptive practices and pricing2 we believe this proposed rule is outside the scope of the Federal Trade Commission’s authority and will only serve to increase consumer confusion and create regulatory conflict.
    • This letter outlines four key areas of specific concern.
      • First, ALTA believes that the McCarran Ferguson Act makes it clear that the FTC does not have the authority to apply this proposal to regulated insurance products and services, including title insurance and real estate settlement services.
        • Thus, the FTC must, should it move forward with its proposal, explicitly exempt from the definition of businesses under its proposal the business of insurance, including products and services provided by the title insurance and settlement services industry.
      • For example, in the title and settlement services industry there are a number of fees that can change based on the consumer decision to purchase certain additional or optional coverages or services. As a result, any final rule must make explicit that a practice is not unfair or deceptive if the ultimate price the consumer pays is due to the choices made by the consumer in the course of the transaction.
      • Lastly, in agreement with points made by the United States Chamber of Commerce, ALTA believes an attempt to regulate “excessive” fees is beyond the FTC’s jurisdiction.
    • The FTC Must Explicitly State that the Business of Insurance is Not Subject to the Rule
    • Any Final Rule Must Make Explicit that a Practice is Not Unfair or Deceptive if the Ultimate Price the Consumer Pays is Due to the Choices Made by the Consumer in the Course of the Transaction
      • These unknown variables make it impossible to accurately disclose a total price to the consumer at the beginning of a transaction.
        • The proposed rule’s attempt to regulate “surprise” price changes conflicts with the right of the consumer to make choices about their needs.
    • In all states the cost of title insurance is set by the type of policy and the amount of insurance, and there can be no variance from the filed, promulgated, or ra􀆟ng bureau rates and fees.