NAIC Recommends No Further Model Laws For Modified Annuities

A National Association of Insurance Commissioners' subgroup concluded that additional regulation of modified guaranteed annuities is not needed.

The Model Law Review Subgroup will hold a conference call next week and disbanding the group is one item on the agenda.

The group formed with two 2018 charges: to look at whether state laws adequately regulated MGAs offered through general accounts products, and whether state laws adequately covered annuity non-forfeiture.

On the former issue, the American Council of Life Insurers advised that a separate model law to regulate MGAs "is not necessary," the NAIC said in a notice.

Modified guaranteed annuities refers to any agreement or contract for an annuity in which the benefits are guaranteed if held for specified periods, while non-forfeiture values are based upon a market-value adjustment formula if held for shorter periods.

The Interstate Insurance Product Regulation Commission standards address MGAs, the NAIC concluded.

"No states have indicated that there are any issues with general account products that need to be rectified," the NAIC notice said.

With respect to the non-forfeiture issue, the NAIC surveyed state officials and found that a previous model law -- Standard Nonforfeiture Law for Individual Deferred Annuities -- is working so well that it eliminated the need for additional regulation.

The subgroup will hold its conference call on Thursday to decide whether to accept the recommendations and disband itself. From Aug. 4-7, the NAIC will hold its annual Summer Conference in Boston.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.