Efforts to require strong disclosures for consumers is nearing completion as state insurance regulators are promising to wrap up the Annuity Disclosure model regulation draft and send it to the Life Insurance & Annuity “A” Committee of the National Association of Insurance Commissioners, Kansas City, Mo., on Oct. 1.
Work will then begin on an Annuity Buyer’s Guide so that the work can be moved through the “A” Committee at the fall NAIC meeting in Orlando, Fla., in October, according to Jim Mumford, chair of the working group and first deputy insurance commissioner with the Iowa insurance department.
During a discussion on final points in the model, Brenda Cude, a professor at the University of Georgia and an NAIC funded consumer, said that it would be worth discussing what the purpose of an illustration should be. If it is to help understand the purpose for an market value adjustment (MVA,) that is one reason, but if it is not the illustration’s purpose, then there needs to be a discussion of what the purpose should be, she said.
There was also discussion of wording in the draft including changes in non-guaranteed elements of annuity contracts and how it is important to remove the wording “better and worse” and replace it with the concept of “higher and lower” and how changes in the market will impact the MVA.
Kelly Ireland of the American Council of Life Insurers, Washington, wanted to make sure that language in disclosures was standardized and that insurers didn’t have to look at every individual disclosure form for individual contracts.
The working group’s Mumford said that regulators just wanted to be certain that companies have control over the illustrations accompanying their products.
During the conversation, Lee Covington of the Insured Retirement Institute, Washington, noted the need for annuity products today as boomers near retirement. He submitted a draft of an annuity buyer’s guide and a summary prospectus and what they could contain.