Range Approach

  • 1988-2, NAIC Proceedings, 1988 0613 - ACLI - Statement on Behalf of the American Council of Life Insurance to the NAIC Market Conduct Surveillance (EX3) Task Force (Attachment 2) - 3p
  • 1988 12 - SOA - Two Approaches to Life Insurance Cost Illustrations, Society of Actuaries - 4p
  • 2017 10/15 or 19 - LIBWG - Letter from the Non-Guaranteed Elements Work Group of the American Academy of Actuaries 
    • We believe consumers would benefit from the inclusion of a discussion of NGEs in the buyer’s guide, and think the following points would be helpful:
    • Products with NGEs have the risk that costs could increase or benefits could decrease, subject to guaranteed limits stated in the policy.
    • Illustrations, if available during the purchasing process, can be useful tools to help consumers understand a range of possible product performance outcomes. <Coverage Periods - Benefits>
  • 1988-2, NAIC Proceedings, 1988 0613 - ACLI - Statement on Behalf of the American Council of Life Insurance to the NAIC Market Conduct Surveillance (EX3) Task Force (Attachment 2) - 3p
    • My name is Anthony T. Spano, ACLI
      • At its December 1987 meeting, the NAIC adopted a set of amendments to the model life insurance advertising rules, one of which would require that all sales illustrations be based on the current scale.
      • At the request of the ACLI, your Task Force agreed to give further consideration to this one provision at June 1988 NAIC meeting.
      • Our proposal involves a method known as the "range" approach.
        • ...provide illustrations based on different assumptions.
        • This would serve to demonstrate to the consumer the effect on future benefits of changes in assumptions.
        • Also, illustrations based on other than the company's current scale can provide particularly useful and timely information if a change in experience is anticipated.
  • MARKET CONDUCT SURVEILLANCE (EX3) TASK FORCE
  • 5. Report of Subgroup on Life Advertising Issues
    • Dick Rogers, as chair of the subgroup, called upon Tony Spano (American Council of Life Insurance) to speak to amendments to the NAIC Model Rules Governing the Advertising of Life Insurance.
      • Mr. Rogers noted that amendments to the model had been adopted in December 1987 but that technical amendments were expected.
    • ACLI - Mr. Spano submitted a written report entitled "Statement on Behalf of the American Council of Life Insurance to the NAIC Market Conduct Surveillance (EX3) Task Force, June 13, 1988" - (Attachment Two-3p).
      • Mr. Spano summarized the report stating that the amendments he proposed (attached to his report) involve a method known as the "range approach" which would govern the use of sales illustrations.
    • Mr. Rogers thanked Mr. Spano for his report and moved that the report be received and that the amendments be submitted for exposure at this time for consideration at the December 1988 national meeting.
    • NALU - The task force then heard from William Albus (National Association of Life Underwriters) who commented that if the so-called "range approach" were adopted, it would not necessarily be beneficial.
      • While he asked to reserve further comment as the proposal is further considered, the NALU was opposed to the amendments.
      • However, Mr. Albus noted his support for the current model and support for its continued adoption in the jurisdictions.

1988-2, NAIC Proc.

  • ACLI - ATTACHMENT TWO - STATEMENT ON BEHALF OF THE AMERICAN COUNCIL OF LIFE INSURANCE TO THE NAIC MARKET CONDUCT SURVEILLANCE (EX3) TASK FORCE, June 13, 1988
  • My name is Anthony T. Spano
  • Our proposal involves a method known as the "range" approach"  provide illustrations based on different assumptions. 
  • ⇒ This would serve to demonstrate to the consumer the effect on future benefits of changes in assumptions.
  • Also, illustrations based on other than the company's current scale can provide particularly useful and timely information if a change in experience is anticipated.
  • We would point out some additional advantages of the availability of the range approach as opposed to a limitation of illustrations to current scale:
  • It is often difficult to define exactly what "current scale" is, since a company may, for example, have a different scale for current issued business as opposed to existing business.
  • A current scale limitation would favor companies using a new-money interest crediting approach versus a portfolio approach when interest rates are rising; the opposite would be true when interest rates are declining.
  • A current scale limitation would disadvantage companies that may be acting prudently by lowering current rates when interest rates decline.
  • Current scale illustrations may not be realistic in certain situations, such as at the peak or trough of an interest rate cycle.
  • Availability of the range approach might ease pressures on companies to produce aggressive current scale illustrations.
  • In concluding, we thank you again for agreeing to keep the dialogue open on this important issue.  We respectfully ask your favorable consideration of our proposal and stand ready to work with your task force in any way that might be helpful.

--  1988 0613 - Letter - ACLI to NAIC - A Statement on Behalf of the American Council of Life Insurance to the NAIC Market Conduct Surveillance (EX3) Task Force, Subgroup on Life Advertising Issues - 3p  

1988-2, NAIC Proceedings - PROPOSED AMENDMENT TO NAIC MODEL ADVERTISING RULES