On September 27, 2010, the National Conference of Insurance Legislators' Life Insurance & Financial Planning Committee (the "NCOIL Committee") continued its discussion of its draft Beneficiaries' Bill of Rights. This was the third call of the NCOIL Committee (see our September 16th Client Alert " NCOIL Committee Permits RAAs As Default Option With Prior Disclosure To Beneficiaries").
The September 27th call focused on the disclosures that insurers must provide consumers on retained asset accounts ("RAAs"). The NCOIL Committee adopted the disclosure requirements proposed by the Louisiana Department of Insurance, with some drafting modifications. In addition, the NCOIL Committee made changes to the disclosure requirements that would allow insurers to use the same disclosure form in all jurisdictions.
Consumer representatives asserted that insurers should be required to disclose that funds held in dormant RAAs would be turned over to state unclaimed property administrators. The consumer representatives questioned insurers on the length of time RAAs are maintained and the extent to which RAA funds are turned over to state unclaimed property administrators. One consumer representative argued that insurers should periodically obtain consumers' affirmations that they wish to maintain their RAAs with the insurer. The NCOIL Committee decided against requiring unclaimed property disclosure in the Beneficiaries' Bill of Rights.
The NCOIL Committee agreed that it would discuss at its next call insurers' reporting obligations to state insurance departments, including disclosure of the age of RAAs. The next conference call will be scheduled for the end of this week or early next week.
Meanwhile, the National Association of Insurance Commissioners' ("NAIC") Retained Asset Accounts Working Group (the "RAA Working Group") has published a revised action plan. According to the revised action plan, September 22nd marked the deadline for insurers' responses to the RAA Working Group's data requests (see our August 27th Client Alert "NAIC RAA Working Group's Meeting to Review Action Plan"). The revised action plan indicates that the RAA Working Group plans to hold a conference call on October 1, 2010 to discuss the compilation of responses it received from insurers. The RAA Working Group intends to make recommendations to its parent committees at the NAIC Fall National Meeting in Orlando, Florida.
While the NCOIL Committee and the NAIC RAA Working Group continue their work on RAAs, several states have taken legislative or regulatory action to govern RAAs. In an Order issued on September 24, 2010, the New Jersey Department of Banking and Insurance is now requiring authorized or admitted insurers:
- Effective 120 days from the date of the Order, to provide specific, enumerated disclosures about RAA benefit payment options: (a) to prospective group policyholders prior to issuing any group policy which offers or requires the payment of claims through an RAA; and (b) to beneficiaries prior to transferring a death benefit to an RAA under an individual or a group policy; and
- Within 150 days of the date of the Order, to submit to the Department for review copies of (a) all forms and other written materials describing RAAs that the insurer is offering to beneficiaries and prospective group policyholders; and (b) copies of all documents the insurer uses to establish an RAA.
The Department also announced in the Order that it will propose rules requiring life insurers to file for approval RAA disclosure statements together with proposed life insurance forms, which rules will also provide standards for the review and approval of such disclosure statements.