LIIIWG - Snippets

2015

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3. (LIAC) Appointed a New Working Group to Address Life Insurance Policy Illustration Issues

  • In response, she <Commissioner McPeak> said the Committee received comments from the American Academy of Actuaries (Academy), the American Council of Life Insurers (ACLI), the California Department of Insurance, the Massachusetts Mutual Life Insurance Company (MassMutual) and the NAIC consumer representatives.
  • Mr. Schwartzer said that absent specific suggested revisions, he would urge caution in opening Model #582 for revision. He suggested tabling the discussion for now until the Committee receives specific suggested revisions. Ms. Froment expressed support for Mr. Schwartzer’s comments.
  • Bruce Ferguson (ACLI) said more than 40 states have adopted Model #582. He noted that, in its comment letter, the ACLI
    suggests enhancing simplicity and transparency of the narrative summary in Model #582 to reflect the significant changes in
    the marketplace since Model #582 was adopted 20 years ago, including the demographics of consumers who buy life
    insurance, the product designs developed to meet the changing needs of consumers and the technology consumers use to obtain information about life insurance products.
  • Commissioner Gerhart noted that some of the comments appear to merit some review of Model #582. Director Ramge agreed and made a motion, seconded by Commissioner Gerhart, that the Committee establish a new working group with a 2016 Proposed Charge to explore how the narrative summary required by Section 7B of Model #582 and the policy summary required by Section 5A(2) of the Life Insurance Disclosure Model Regulation (#580) can be enhanced to promote consumer readability and understandability of these life insurance policy summaries, including how they are designed, formatted and accessed by consumers.
  • Mr. Regalbuto expressed support for opening Model #582 to look at issues related to AG 49. Mr. Robleto asked if appointing
    a new working group to look at the narrative summary provision in Model #582 and the policy summary provision in
    Model #580 addressed the Committee’s commitment to level the playing field among insurers. Commissioner McPeak said
    addressing that issue is still in progress.

2016

2016/4/3, LIIIWG CC, NAIC Proceedings (6-8)

  • Mr. Schwartzer reminded the Working Group that the Life Insurance Illustration Issues (A) Working Group came out of concerns raised when the Indexed Universal Life (IUL) Illustrations (A) Subgroup under the Life Actuarial (A) Task Force was working on guidance for IUL policy Illustrations that would result in consumers being better able to understand the product performance and interest variability of IUL products.
    • During the IUL Illustrations (A) Subgroup’s discussions, interested parties expressed a need to take a broader look at how all products are explained to consumers.
  • Mr. Lovendusky said the ACLI work group discussed whether the charge should include revising the Buyer’s Guide, which was a suggested addition to the charge from the American Academy of Actuaries (Academy).
    • While the ACLI work group did not oppose including the Buyer’s Guide, some on the work group thought that revisions to the Buyer’s Guide might work instead of revisions to the models.
    • However, Ms. Cude pointed out that the Buyer’s Guide has a different purpose from the policy summary and that revisions to one would not take care of the other because the Buyer’s Guide is designed to be educational, while the policy summary is informational and explains a particular policy.

  • "He <Michael Lovendusky - ACLI> said consumers are mostly confused about options, guarantees and riders.

    • The ACLI work group was considering asking the Life Insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.

Executive (EX) Committee and Plenary
New Orleans, Louisiana
April 6, 2016

(3-3)

4. Received the Report of the Life Insurance and Annuities (A) Committee

The Committee adopted the report of the Life Insurance Illustration Issues (A) Working Group, which heard from
representatives from the American Council of Life Insurers (ACLI) and the Center for Economic Justice (CEJ) regarding
issues to consider and possible approaches for completing its charge.

(LIAC)

3. Discussed a Proposed Amendment to the Charge for the Life Insurance Illustration Issues (A) Working Group
Currently, the Life Insurance Illustration Issues (A) Working Group has a charge to:
Explore how the narrative summary required by Section 7B of the Life Insurance Illustrations Model Regulation
(#582) and the policy summary under the Life Insurance Disclosure Model Regulation (#580) can be enhanced to
promote consumer readability and understandability of life insurance policy summaries, including how they are
designed, formatted and accessed by consumers.
Commissioner Gerhart explained that the American Academy of Actuaries (Academy) wrote a letter suggesting expansion of
the Working Group’s charge to include a review of the Life Insurance Buyer’s Guide (Buyer’s Guide). He said the American
Council of Life Insurers (ACLI) followed up with a letter stating that it did not oppose the addition, but pointed out that the
Committee itself already has an existing charge to revise the Buyer’s Guide, and the addition of this task to the Working
Group might slow down its ability to accomplish the current charge.
6-2 NAIC Proceedings – Spring 2016
© 2016 National Association of Insurance Commissioners 2
Birny Birnbaum (Center for Economic Justice—CEJ) expressed support for updating the Buyer’s Guide generally, but said
the charges contemplated for the Working Group serve a different purpose. He explained that the Buyer’s Guide is an
educational document and the revisions contemplated in the charge to the Working Group focus on plan-specific information.
Mr. Regalbuto said New York is releasing Insurance Regulation 74 focusing on universal life illustration issues and updated
its buyer’s guide with respect to universal life. Brenda Cude said the Buyer’s Guide needs a total overhaul, not just a revision.
She explained that the products in the marketplace have radically changed since the time the Buyer’s Guide was first written.
The Committee agreed that because there is an existing charge to revise the Buyer’s Guide and the focus of the Buyer’s
Guide is different from focus of the Working Group’s charge, the charge should remain as written.

8. Adopted its Working Group and Task Force Reports
a. Life Insurance Illustration Issues (A) Working Group
Mr. Schwartzer reported that the Life Insurance Illustration Issues (A) Working Group met for the first time April 3
(Attachment Two). During this meeting, the Working Group heard from representatives from the ACLI and the CEJ
regarding issues to consider and possible approaches for completing its charge. The Working Group asked the ACLI for
examples of policy summaries and narratives currently in use and plans to begin to look into consumer testing to inform the
Working Group as it moves forward. The Working Group plans to begin meeting by conference call within the next month.
Director Cameron made a motion, seconded by Commissioner Donelon, to adopt the report of the Life Insurance Illustration
Issues (A) Working Group. The motion passed

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2017

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2018

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2019

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2020

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