When state insurance regulators meet in San Francisco starting tomorrow they will be looking at issues including advancing an annuity suitability model that cleared a hurdle on Dec. 1, holding a hearing on an insurance compact commission that recently had state legislators riled up, and having more discussions on a new rating system that is being developed and a new federal insurance office proposal that is being discussed in Congress.
The meeting of the National Association of Insurance Commissioners starts just days after a suitability of annuity sales working group overwhelmingly advanced revisions to the Suitability in Annuity Transactions model regulation. The model was adopted and will pass to the Life Insurance and Annuities “A” Committee by a vote of 13-2 with one abstention.
Among the discussion points that preceded the vote was a concern by Vermont and California that there was still work that needed to be done and the vote should be delayed. Points regulators raised included a concern that it would be the responsibility of a company for every transaction to be reviewed and that if the work is contracted out, that it not absolve a company from making sure that the work was completed. There was also concern that the definition of ‘recommendation’ was too narrow.
Consumer advocate Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, asked that additional language be considered that he said would be consumer friendly but members of the working group said that the discussion had gone on for a year and could go on for a lot longer if allowed. They said that it was time to vote on the model and move it up to “A” Committee and toward adoption.
But insurers and producers urged that there be more discussion on the issue. Ron Panneton of the National Association of Insurance and Financial Advisors, Falls Church, Va., said there are still several areas that need work in order for the model to be more uniformly adopted. And, Eric DuPont of Met Life told regulators that because of the lack of consensus among regulators, the revisions will probably not be uniformly adopted. A lack of uniformity requires different tweaks to compliance systems and additional training and is very expensive for companies, he added.
Separately, a regulatory modernization public forum will be held on Dec 5 to discuss the current National Insurance Supervisory Commission proposal. At the meeting of the National Conference of Insurance Legislators, Troy, N.Y., two weeks ago, state legislators expressed anger that a discussion on the NISC, which they said had been promised, had never materialized.
The discussion comes at the NAIC expresses support for the FIO proposal and maintains its position that state regulation must be preserved and NCOIL is reiterating the authority of states to regulate insurance. Both positions are made in separate letters to Congress.
In a recent interview, State Rep. Robert Damron, D-Nicholasville, Ky., and the new NCOIL president, said that state legislators do not support the positions the NAIC has taken in Washington, which is why NCOIL pressed for the hearing. He said that state legislators would never support any proposal which would force states to cede power and that states not only regulate insurance but perform important functions such as gathering data that is then transmitted to the NAIC.