A National Association of Insurance Commissioners working group is narrowing down issues related to a proposed two-page “policy overview” summary to accompany life insurance sales.
Designed to “enhance consumer understanding,” the two-page summary proposal has been in the works for nearly three years. The Life Insurance Illustration Issues Working Group held a conference call Tuesday to address some remaining issues.
Specifically, Birny Birnbaum, executive director of the Center for Economic Justice, reminded the group to “keep in mind what the purpose of a policy overview is. In our view, it’s not an addendum to an illustration.”
Discussion drifted to how detailed the policy overview might become if some products offer multiple indexed options.
“If we have 22 fixed accounts, could this get a little unwieldy?” asked working group chairman Richard Wicka, deputy chief legal counsel for the Wisconsin Office of the Commissioner of Insurance.
“I hate to say you have to list just five of them, or five that the agent recommended,” said Jodi Lerner, attorney for the California Insurance Department, “but that is a possibility.”
“We don’t want to put the agent in the position of deciding what to disclose or not to disclose,” Birnbaum quickly interjected.
The group was receptive to a proposal to limit the policy overview to Model Law #580, the Life Insurance Disclosure Model Regulation. The working group charge calls for a duel policy summary reviews for both model laws #580 and #582 – the Life Insurance Illustrations Model Regulation.
But Birnbaum argued that it is inappropriate for the policy summary to be a part of Model Law #582.
The purpose of Model Law #582 is to provide guidance for illustrations, he noted. The purpose of Model Law #580 is to “provide information to enable consumers to shop and make informed purchases of the products that meet his or her needs,” Birnbaum said in a comment letter.
“It would not only be duplicative to include the same requirements for the narrative summary in Model 582, but would be inconsistent with the purpose of the narrative summary, which is to explain the illustration and not to provide consumers with a broader shopping tool,” he wrote.
The group, including a representative from the American Council of Life Insurers, agreed with Birnbaum’s suggestions.
However, Wicka said the group might need to return to the A Committee and revise its charge.
The working group will likely hold another call to iron out the remaining issues. The full NAIC Fall Meeting is Nov. 15-18 in San Francisco.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilto[email protected]. Follow him on Twitter @INNJohnH.
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