Life Insurance and Annuities (A) Committee
Life Insurance and Annuities (A) Committee Page
Joint Executive (EX) / Plenary Committee Summary Report
Summer 2009 Meeting Summaries Index

The Life Insurance and Annuities (A) Committee met June 14, 2009.

During this meeting, the Committee:

• Adopted a resolution in support of recognizing September 2009 as Life Insurance Awareness Month.

• Heard a legislative update of bills of interest to the Committee.

• Adopted the report of the Consumer Guides Subgroup. A small drafting group of the Consumer Guides Subgroup has developed drafts of the Buyer’s Guide for Fixed Indexed Annuities and the Buyer’s Guide for Variable Annuities. Due to competing priorities of the chair of the Subgroup, the drafting group has been unable to make progress on these two buyer’s guides since the 2008 Winter National Meeting. At the suggestion of the Subgroup chair, the Subgroup was reassigned to report to the Annuity Disclosure Working Group, because the consumer guides are an appendix to the NAIC Annuity Disclosure Model Regulation.

• Adopted the report of the Annuity Disclosure Working Group. The Working Group continued its discussion of the guaranty fund coverage disclosure notice issue. At the Working Group’s request, a draft guaranty fund coverage disclosure template was developed by the American Council of Life Insurers (ACLI) and the National Organization of Life & Health Insurance Guaranty Associations (NOLHGA). It updates the general notice on guaranty fund coverage required to be provided under Section 19 of the Life and Health Insurance Guaranty Association Model Act. The draft template was discussed during the Working Group’s May 14 conference call. Following the conference call, interested parties were asked to submit comments on the draft. Based on the comments received, ACLI and NOLHGA prepared a revised draft incorporating the comments. The Working Group will hold a conference call in July to discuss the revised draft and any comments received on the revised draft. The Working Group did agree to refer the draft template to the Receivership and Insolvency (E) Task Force for its review and comment. The Working Group also continued its discussion of the annuity illustration issue. The Working Group discussed comments received from the American Academy of Actuaries on a second version of the proposed annuity illustration guidelines. The Working Group anticipates holding one or two conference calls in August to complete its work on the guidelines.

• Adopted the report of the Indexed Annuities Working Group. The main focus of the Working Group’s activities was to complete a nationwide data call and issue a public report regarding annuity products with a specific focus on the sales and marketing practices of indexed annuities. The State of Iowa, on behalf of the Working Group, issued a nationwide data call Dec. 1, 2008, to assist all states in identifying issues and trends in the fixed indexed annuity marketplace. The data call was issued to 69 companies domiciled in 22 states. Companies were required to complete and return the data to Iowa by Feb. 13.  NAIC staff aggregated the company-specific data for national analysis and issued a report of the findings. With the issuance of the report, the Working Group has completed its charges and, as such, a motion to disband the Working Group was passed.

• Adopted the report of the Suitability of Annuity Sales Working Group. During a series of meetings, the Working Group reviewed and discussed provisions in a revised discussion draft of proposed revisions to the Suitability in Annuity Transactions Model Regulation. At the conclusion of that discussion, including receiving comments from regulators and interested parties concerning issues of concern with certain provisions in the revised discussion draft, the Working Group voted to distribute an exposure draft for comment within the next few weeks.

• Received the report of the Life and Health Actuarial Task Force, which included adopting:
• Actuarial Guideline 1c.
• Revisions to Actuarial Opinion and Memorandum Regulation (Model Regulation #822).
• Revisions to Valuation of Life Insurance Policies Model Regulation (Model Regulation #830).

The Committee also approved the release of the VM-20 section of the Valuation Manual for comment and the release of 2010 GRET table for comment. The Committee decided to defer adopting the revisions to the Standard Valuation Law in order to allow for a 30-day comment period. The Committee anticipates holding a joint conference call with the Principles-Based Reserving (EX) Working Group and the Solvency Modernization Initiative (EX) Task Force within the next few months to consider those revisions. The Committee also decided to defer adopting the revisions to the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities (Model Regulation #815) to provide additional opportunity for regulators and interested parties to review the proposed revisions. The Committee anticipates holding a conference call within the next few weeks to consider the revisions.

Action Items:

• Adopted a resolution recognizing September 2009 as Life Insurance Awareness Month.
• Adopted the report of the Consumer Guides Working Group, which included moving the Subgroup under the Annuity Disclosure Working Group.
• Adopted the report of the Annuity Disclosure Working Group.
• Adopted the report of the Indexed Annuities Working Group, which also included disbanding the Working Group.
• Adopted the report of the Suitability of Annuity Sales Working Group.
• Received the report of the Life and Health Actuarial Task Force, which included adopting:
  • Actuarial Guideline 1c.
  • Revisions to Actuarial Opinion and Memorandum Regulation (Model Regulation #822).
  • Revisions to Valuation of Life Insurance Policies Model Regulation (Model Regulation #830).