NAIC - Annuities

  • Annuity Suitability Safe Harbor Guidance
  • MODEL LAWS
  • content.naic.org/sites/default/files/legacy/documents/legal_mod_law_toc.pdf 
  • MDL-235 - Interest-Indexed Annuity Contracts Model Regulation
  • MDL-240 - Charitable Gift Annuities Model Act
  • MDL-241 - Charitable Gift Annuities Exemption Model Act
  • MDL-245 - Annuity Disclosure Model Regulation This model regulation provides standards for the disclosure of information about annuity
  • MDL-250 - Variable Annuity Model Regulation
  • MDL-255 - Modified Guaranteed Annuity Regulation
  • MDL-260 - Variable Contract Model Law
  • MDL-275 - Suitability in Annuity Transactions Model Regulation
  • MDL-278 - Model Regulation on the Use of SeniorSpecific Certifications and Professional Designations in the State of Life Insurance and Annuities
  • MDL-568 - Military Sales Practices Model Regulation The purpose of this model regulation is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair.
    • This regulation shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces
  • MDL-570 - NAIC - Advertisements of Life Insurance and Annuities Model Regulation
  • MDL-613 - NAIC - Life Insurance and Annuities Replacement Model Regulation
  • MDL-692 - Interstate Insurance Product Regulation Compact
    • This model establishes a compact for the purpose of approving forms for life, annuity, disability income and long-term care insurance. The compact also has authority to review and approve rates for disability income and long-term care, as well as advertising for longterm care insurance.
  • MDL-693 - Market Conduct Surveillance Model Law
    • This model law establishes a framework for market conduct actions, including processes and systems for identifying, assessing and prioritizing market conduct problems; actions by a commissioner to substantiate market conduct problems and a means to remedy significant market conduct problems; and procedures to communicate and coordinate market conduct actions among jurisdictions to foster the most efficient, effective use of resources.
  • MDL - 695 Synthetic Guaranteed Investment Contracts Model Regulation
    • This model regulation prescribes the terms and conditions under which life insurance companies may issue group annuity contracts and other agreements that establish the insurer's obligation by reference to a segregated portfolio of assets that is not owned by the insurer; the essential operational features of the segregated portfolio of assets; and the
      reserve requirements for these group annuity contracts and agreements.
  • MDL-805 - Standard Nonforfeiture Law for Individual Deferred Annuities
  • MDL-806 - Annuity Nonforfeiture Model Regulation 

NAIC - National Association of Insurance Commissioners - Documents - Index

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Trade Practices

  • Equal to the need for financially sound insurance products is the need for socially responsive insurance companies.
    • Consumers are not well served by a company that meets statutory reserve requirements but engages in unacceptable or morally-barren trade practices any more than they are served by companies that offer them pie-in-the-sky policies backed by assets worth no more than the paper on which they are written.
    • Therefore, the issues brought to the NAIC should not be so narrow as to overlook the relationship of product service and product soundness.
    • Both elements need to be balanced as decisions are made in a changing industry.

—  Lymcon L. Olson, Jr., NAIC Presidential Address

1983-1, NAIC Proc.

NAIC Proceedings - Index

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Universal Life Insurance – Valuation

  • p – 1987 06 – Report – American Academy of Actuaries Universal Life Task Force – Preliminary Report Concerning Valuation and Nonforfeiture Provisions of Universal Life Insurance Model Regulation – ATTACHMENT TWO-B
  • p495 – BACKGROUND AND SCOPE
    • The Life and Health Actuarial Task Force (ATF) asked the American Academy of Actuaries Life Committee to develop amendments to the valuation and nonforfeiture provisions of the NAIC’s Universal Life Model Regulation. In a letter to John Montgomery, dated Oct. 22, 1986, Gary Dahlman, chairperson of the Academy’s Committee on Life Insurance, stated that a Universal Life Task Force (ULTF) would be created to work on this problem.
  •  AAA – American Academy of Actuaries – Preliminary Report – American Academy of Actuaries Universal life Task Force American Academy of Actuaries
    • APPENDIX D – Sample Valuation Calculations
      • This appendix contains sample valuation calculations for six universal life products. Valuations were performed using the following fuur methods: current model regulation method, GMP method, paid·up method and policy value method. For a description of these methods, see Section 4 of this report. The appendix consists of the following:
        • Cover Note
        • Summary of the Specifications for the Six Products
        • Summary of Results
        • Detailed Results for Product #1
    • Product #6 – … This is the same as Product #5, but is a flexible premium product, so there is no traditional net single premium reserve minimum in the first few years, nor are whole life benefits guaranteed at issue through a secondary guarantee as with Product #5. Note that the GMP method reserves using 5.5% interest are substantially higher for Product #6 than for Product #5. This is because for Product #6 a large portion of the reserve is simply the account value; for Product #5 the reserve is the present value of benefits (projected at 4%, discounted at 5.5%).

1988-1, NAIC Proceedings – LIFE AND HEALTH ACTUARIAL (EX5) TASK FORCE

Guaranteed Maturity Premium Nonforfeiture Test

  • p412 - Enclosure 5 - Guaranteed Maturity Premium Nonforfeiture Test
    • The guaranteed maturity premium (GMP) test is a proposed method fur judging whether or not a universal life product provides guaranteed cash surrender values in excess of prescribed minimums.
    • The GMP test is concerned primarily with the pattern of policy loads and surrender charges. When used in conjunction with a prescribed smoothness of cash value criteria, the GMP test is effective in disqualifying policies with odd patterns of loads or those with high loads over a sustained number of years.
    • The guaranteed maturify premium is calculated as prescribed in the NAIC Universal Life Model Regulation. It is calculated without regard to any minimum premiums required by the company.

1988-2, NAIC Proceedings - Life and Health Actuarial (EX5) Task Force 

McKinsey

  • 1973 – Report – McKinsey – Strengthening the system for exercising surveillance over insurance companies – HG 8536 M34 S78 – WishList>
  • 1973 – Report – McKinsey – Improving the efficiency and effectiveness of the system for exercising surveillance over insurance companies – HG 8536 M34 S77 – <WishList>
  • 1974 – Report – McKinsey – Strengthening the surveillance system : Phase 1 report –  HG 8536 M34 S79 1973 – <WishList>
  • 1974 – Report – McKinsey – Strengthening the surveillance system : final report – Electronic resource – 126p – naic.soutronglobal
  • 1974 – Report – McKinsey – Improving the property/liability early warning system McKinsey & Company, Inc 1974 HG 8535 M34 S81
  • 1974 – Report – McKinsey –  Improving the life and health early warning system McKinsey & Company, Inc 1974 HG 8535 M34 S80 – – <WishList>
  • 1975 – SOA – Examining Department Examinations – Strengthening The Surveillance System, Final Report to the NAIC – McKinsey Co. Inc., New York, by George Brummer, The Actuary – act-1975-vol09-iss01-brummer – Society of Actuaries – 5p
  • 1977 – SOA – NAIC Examiner’s Handbook, by Lewis P. Roth, The Actuary, act-1977-vol11-iss02-roth – 3p
    • At the June NAIC meeting, the Executive Committee adopted the Financial Condition Examination Handbook and the Market Conduct Examination Handbook, both of which became effective on January 1, 1977. The purpose of the book is to update and simplify the examination process for all insurance companies. Such examinations were recommended in the McKinsey & Company Report to the NAIC on Strengthening the Surveilance System 
  • 1981 – NAIC – Background Paper on the Status of the Regulation of Market Conduct in the Insurance Industry, NAIC Market Conduct and Trade Practices (B1) Subcommittee Attachment Five – 17p
    • This paper describes the history of the examination process, summarizes the 1974 McKinsey evaluation of the examination system, outlines market conduct developments since the McKinsey study and identifies current market conduct issues.

Comments About - NAIC - Insurance Regulators

  • 2025 0624 - LIFE180 / Chris Kirkpatrick - Interview With IUL Litigation Attorney LIVE - [Robert Rikard]  ---  [BonkNote]  ---  [VIDEO-YouTube-01:19:10]
    • Robert Rikard - Getting ready to launch a new firm -  Only doing these types of cases
    • We are going to put a dent - people Selling IUL as an investment, Stealing money from lower class and lower middle class peple - We are going to put a stop to it, because regulators are not. We can bring pain and we do.

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  • Mr. Mead: We feel that if periodically attention is called to the agents, whether their business has been satisfactory as regards persistency, or unsatisfactory, we shall do much to encourage the good man, and also the poor man, that he may put his business on a higher plane.
    • It will also be of advantage to us in studying the pitfalls of many of our producers.  (p254)

1919 - The Record, American Institute of Actuaries - Estimating the Rate of Persistency - [PDF-GooglePlay-451p]

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  • (p1501) - John Durkin, New Hampshire Insurance Commissioner: As a starting point, there is little regulation of the life insurance industry by the States.
    • The States do little with respect to life insurance regulations for many reasons, mainly because there are very few problems with complaints over claims.
    • Most of the staffs are involved with complaints relating to automobile insurance and health insurance.
    • Life insurance is sort of the stepchild of many, if not most, insurance departments.

1973 0221 and 0222 - GOV (Senate) - The Life Insurance Industry - Part 2 of 4 - Philip Hart (D-MI)  ---  [BonkNote-Part 2 of 4]  ---  [PDF-733p-GooglePlay]   

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  • CHAPTER III - THE MARKET, THE NAIC, AND THE FTC
  • We would have expected to find the NAIC employing its influence to dissipate the wholly unnecessary confusion that surrounds the term-whole life controversy.
    • Regrettably, we find the NAIC at the forefront of efforts to perpetuate it.

1978 12 - GOV (House) - Life Insurance Marketing and Cost Disclosure Report Together with Dissenting Views, John Moss (D-CA)  ---  [BonkNote]

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  • Some of our problems, however, have been caused by regulatory bodies. 

--  Barbara J. Lautzenheiser

1981 - SOA - The Life Insurance Business -- The View of Consumerists, (rsa81v7n38) - Daniel F. Case - Moderator, Society of Actuaries - 18p

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  • 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

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  • ...  Joseph M. Belth, who taught insurance for many years at Indiana University and publishes the Insurance Forum, a consumer oriented newsletter.
    • "This is an industry in which various forms of deceptive practices flourish, and the regulators have not done anything about it.
    • Whether this inaction is because they don't want to do anything or don't understand or don't have the resources I am not prepared to say," Belth said, but he added, "I think it's a combination" of those things."

1994 0313 - The Washington Post - Do Life Insurers Foul the Sales Pitch?, By Albert B. Crenshaw  ---  [BonkNote]  ---  [link]

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  • One other issue I did want to touch on is the effort of the NAIC on codification.
  • I'm sure that a lot of you have not paid a lot of attention to codification. It seems like an effort that the accountants are making, that we hope won't effect us too much. The effort on codification is a very serious and broad effort at the NAIC. The people working on it are not just looking at codifying current practice. They're also looking at changes.

--  Craig R. Raymond 

1995 - SOA - VASP - Valuation Actuary Symposium Proceedings - Session 2 - Life and Annuity Valuation Issues, VASP952 - Society of Actuaries - 18p

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  • Frank S. Irish, ASB, Actuarial Standards Board - The whole process started in the NAIC, as it had to If radical changes in the way we illustrate policies were going to be made, they had to start at the NAIC.
    • Furthermore, the NAIC was being pushed by Senator Howard Metzenbaum who wanted to accuse the regulatory structure of not doing its job and then to bring regulation up to the federal level.

1996 - SOA - Professional Standards Affecting Life Actuaries, Society of Actuaries - 18p

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  • Let me begin by reading to you a quote which demonstrates both the desire of State regulators to achieve the uniform licensing standards and the impediments to it:

"The Commissioners are now fully prepared to go before their various legislative committees with recommendations for a system of insurance law which shall be the same in all States - not reciprocal, but identical; not retaliatory, but uniform."

  • This statement expressing the clear desire for a uniform insurance regulatory system was made by Mr. George W. Miller, the New York Insurance Commissioner who founded the National Association of Insurance Commissioners. Mr. Miller made this statement at the end of the very first meeting of the NAIC in 1871. Since then the NAIC has been working for 130 years to achieve some form of regulatory uniformity. I wish they could have solved the problem, but they clearly have not.

--  Sue Kelly (R-NY) - Letter - 3p

2001 0516 - GOV (House) - NARAB And Beyond, Richard Baker (R-LA) - [PDF-79p, VIDEO-?] 

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  • No one could deny that State insurance commissioners have a poor record when it comes to market conduct oversight of the insurance industry, and consumers have been abused as a result.
  • We could go through many examples.  (p13)

It is hard to fix a system that has not been analyzed.  (p14)

  • There should be suitability rules in place, particularly for cash value life insurance policies to assure that sales of proper products are made.  (p14)

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

2003 0506 - GOV (House) - Increasing the Effectiveness of State Consumer Protection, Sue W. Kelly (R-NY)  ---  [BonkNote]

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  • Most state insurance regulators generally only conduct investigations of insurance company sales practices when they receive customer complaints.
    • Although some state insurance regulators review insurance companies' product sales practices as part of market conduct reviews, few insurance products are subject to any suitability or appropriateness standards.  (p11)

2005 11 - GAO - Financial Product Sales: Actions Needed to Better Protect Military Members, Government Accountability Office - 88p

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  • Ed Royce (R-CA) - So we have the SEC. We have the Fed. We have the OCC that all serve to get financial instruments to represent the interests of the banking industry in terms of gaining access to markets overseas, and you are speculating that the National Association of Insurance Commissioners is not going to have that same clout or seat at the table in terms of opening those markets for competition?
  • ACLI - Christopher M. Condron, Chairman of the Board and Chief Executive Officer, AXA Equitable Life Insurance Company, on behalf of the American Council of Life Insurers
    • They just cannot. You know, they cannot agree on what the reserving requirements will be on universal life insurance policies, or when they do agree, they cannot get all of the States to go along, and that is the frustration, I think, Commissioner Bell and all of the commissioners have always had with the NAIC.

2007 1003 - GOV (House) - The Need for Insurance Regulatory Reform, Paul Kanjorski (D-PA) - [PDF-163p, VIDEO-?] 

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  • Michael Lovendusky, association general counsel for ACLI, described the NAIC as a conflicted 137-year-old organization and a 13-year-old organization.
    • The older NAIC, he said, worked well with the insurance industry.
    • "That cooperative effort is being destroyed in ways we don't understand," he said, noting that the younger NAIC often fails to have discussions with the industry.
    • That results in insurance groups going on a "scavenger hunt" to seek information as to what NAIC business is conducted behind closed doors, he noted.

2008 0604 - InsuranceJournal.com - Insurers Blast Insurance Regulators as Closed to Open Dialogue, By Patricia-Anne Tom - [link]

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  • YPFS: Since AIG is an insurance company, what was the role of the insurance regulators and their interaction with the Fed during this time?
    • Tom Baxter: The insurance commissioners really didn't help the rescue of AIG, but they didn't harm it either.

2018 1120 - Yale - YPFS - Lessons Learned Oral History Project Interview: Thomas Baxter, General Counsel of the Federal Reserve Bank of New York  ---  [BonkNote]  ---  19p

NAIC – Run – Disintermediation

  • B. FSOC failed to assess the risk of asset liquidation against existing regulatory authority to actively prevent a “run on the bank” scenario, including early warning through risk-based capital requirements and stays on surrender activity. ………………10
    • Unlike countless banking products, insurance products are not designed to allow access to funds on demand, and often contain deterrents such as the policy limitations or penalties for early withdrawal.  (p16)
    • [Bonk: Stays? Moratoriums?]

Document 43 – MetLife v. FSOC – Consent Motion of the National Association of Insurance Commissioners for Leave to File Brief as Amicus Curiae in Support of Plaintiff MetLife, Inc. – NAIC – 32p

 – LC – MetLife v. FSOC (Financial Stability Oversight Council)  —  [BonkNote]

NAIC - Insurance Commissioners - Snippets - 2020s

  • 2020 0107 - WSJ - It's the Hottest Thing in Life Insurance. Are Buyers Aware of the Risks? Regulators worry insurers are underplaying the dangers of a product tied to the performance of the U.S. stock market, by Leslie Scism - [link]

    • ⇒ One concern is that existing consumer materials "can lead to unrealistic expectations," said Fred Andersen, an actuary with the Minnesota Department of Insurance who is a leader in the effort at the National Association of Insurance Commissioners.

    • Paul Graham, chief actuary with trade group American Council of Life Insurers, said the industry supports development of materials and disclosures that help consumers "make the right decisions," though "we do have different views amongst our companies as to how to best accomplish that on rather complex IUL products."

    • Some regulators and advisers fear indexed universal life will offer a repeat of what many consumers experienced with a policy known as basic universal life.

      • Those policies were a sensation in the 1980s when U.S. interest rates were in double digits.