NAIC Adopts Retained Asset Accounts (RAA) Bulletin, Initiates PPACA Agent Group

State insurance commissioners finished up business and prepared to start new work as 2010 winds down.

During a conference call last week, the executive committee and the plenary of the National Association of Insurance Commissioners, Kansas City, Mo. took action on over 11 items including a controversial issue on how to better regulate retained asset accounts. RAAs and beneficiaries understanding of those death benefit options generated public debate starting in July of this year.

The bulletin includes a disclosure that RAAs are, in general, protected by state guaranty associations, according to Roger Sevigny, New Hampshire commissioner and former NAIC president. Sevigny spearheaded the RAA effort. The point had been debated because of concern that it could be used as a marketing tool but ultimately, it was decided that since the information is delivered at the point of claim, that would not be an issue.

Commissioners also passed a motion to establish a committee to look at the impact of the Patient Protection and Affordability Act (PPACA) on producers both before and after a medical loss ratio provision adopted by the NAIC earlier this year. The goal of the new group is to examine and ameliorate some of the impact on the marketplace and its agents who may lose commissions.

There was some discussion when New Jersey Insurance Commissioner Tom Considine expressed concern that the charge was overly broad because it would not just look at the impact on producers but also consumers and the insurance market. But Florida Insurance Commissioner Kevin McCarty emphasized that the focus would be narrow. As the discussion continued, three additional states, Delaware, South Dakota and Wisconsin asked to be added to the NAIC working group.

A third issue that was discussed was a recommendation to the U.S. Department of Health and Human Services on a rate filing disclosure form. The NAIC was charged with providing recommendations under the new PPACA law as detailed by Oregon Director Teresa Miller.

The discussion focused on two amendments: one technical removing a heading and a second offered by America’s Health Insurance Plans, Washington, and Blue Cross/Blue Shield, Chicago, which recommending rate filing form disclosure on a 12-month rolling basis rather than on a month-to-month basis.

Miller questioned the introduction of an amendment two days before a vote when the issue had been discussed and vetted for months. She said that the last minute nature of the proposal would not be fair because it would not give interested parties sufficient time to discuss the issue. She did not address the merit of the proposal.
South Carolina’s Scott Richardson said that the proposal did seem to have merit but New York regulator Lou Felice said that a month to month review could provide regulators with a tool for early detection of unfavorable trends.

Iowa Insurance Commissioner and NAIC President Elect Susan Voss reminded commissioners that these are just recommendations to HHS. Sandy Praeger, Kansas insurance commissioner, former NAIC president, suggested that a cover letter explain the proposal along with the NAIC work and say that this could be something the HHS may want to consider.