NAIC Working Group Settles On Policy Summary Concept

A state insurance commissioners' working group ironed out a few sticking points Friday with its long-delayed “policy overview” summary to accompany life insurance sales.

With language and process proposed by Chairman Richard Wicka, deputy chief legal counsel for the Wisconsin Office of the Commissioner of Insurance, the group agreed to require distribution of a policy overview in tandem with the buyer's guide on all life insurance policies.

Policies without an illustration will also include a premium and benefit pattern summary, Wicka added. The group accepted these suggestions from the Center for Economic Justice.

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 final conference call in advance of the National Association of Insurance Commissioners' Fall Meeting this week in San Francisco.

The CEJ is also pushing for specific language to help consumers with "comparison shopping" of products, said Executive Director Birny Birnbaum in a comment letter. The industry opposes a language template in the policy overview.

"The tool for these purposes should be very similar across insurers for similar products," Birnbaum wrote. "The way to address industry concern about one-size fits all is to develop templates for different categories of products."

Too Much Change

Michael Lovendusky, vice president and associate general counsel for the American Council of Life Insurers, had concerns that too much has changed from the working group's initial charge.

"It’s not clear to ACLI staff at least whether our member companies comprehend how the work effort is evolving and just what the practical applications are of requiring not only a policy overview, but also a premium and benefits pattern summary," he said.

While calling the effort to achieve consistency in disclosures and illustrations "admirable," Lovendusky said those efforts can go too far.

"Neither policy was intended to replace buying guide or to relive consumers of their own responsibility to learn about the products they’re spending their hard-earned money to buy," he said.

But the process started with a plan to make the policy overview an attachment to illustrations, Wicka reminded him.

"Now we’re kind of looking at it as a standalone document. That’s really the only change," Wicka said. "As drafted, it shouldn’t change any of the delivery requirements right now."

During their last call, 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 working group will accept public comments on the new policy overview for 30 days, Wicka said.

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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