On October 6th and 7th, the NAIC Retained Asset Account Working Group (the "NAIC RAA Working Group") and the NCOIL Life Insurance & Financial Planning Committee (the "NCOIL Committee"), respectively, continued their work on retained asset accounts ("RAAs"). During the NAIC RAA Working Group call, Co-Chair Roger Sevigny provided a status update on the items outlined in the September 1st Action Plan . The NCOIL Committee call focused on the information that insurers would be required to provide on RAAs to insurance regulators.

Co-Chair Sevigny reported that the NAIC RAA Working Group is reviewing the results of its survey on RAAs to determine its course of action. Based upon a preliminary analysis of the survey results, it was proposed that the NAIC RAA Working Group prepare drafts of the following items to be discussed at its October 18th meeting during the NAIC Fall 2010 National Meeting:

  • A policy statement on clear disclosures if an insurance company uses RAAs.
  • A uniform disclosure form for use of RAAs.
  • An updated NAIC Retained Asset Account Bulletin.

The NAIC RAA Working Group also discussed that it would still need to consider whether supplemental contracts should be filed with state insurance regulators for approval. One regulator acknowledged that this discussion involved public policy considerations. A consumer representative questioned whether the NAIC RAA Working Group would be addressing dormant RAAs.

The NCOIL Committee continued reviewing its draft Beneficiaries' Bill of Rights (the "Model RAA Bill"). During the call, the NCOIL Committee reviewed a number of proposed clarifying changes to the Model RAA Bill as well as the provisions on required disclosures to state insurance regulators, penalties, and the effective date.

A number of clarifying changes were adopted to previously discussed sections of the Model RAA Bill. Two changes, however, were more substantive. At Representative Damron's suggestion, the NCOIL Committee adopted language to make clear that the Model RAA Bill covered all proceeds from a life insurance contract, including, but not limited to, the payment of cash surrender value. The NCOIL Committee also adopted language requiring that insurers inform the owner of the proceeds of the right to request a lump-sum payment by bank check.

Much of the October 7th call focused on insurers' reporting obligations. These discussions centered on insurers' obligations with respect to owners who may have forgotten about their RAAs. The NCOIL Committee approved language requiring that insurers provide information on (a) the age of RAAs, and (b) when RAAs are turned over to state unclaimed property administrators. It also approved language requiring insurers to return the balance of an RAA to the owner if the RAA has been inactive continuously for four years and the owner has not affirmatively directed the insurer to continue the RAA during that time frame.

The NCOIL Committee is preparing a final draft of the Model RAA Bill based upon the October 7th call, which will be discussed for adoption at NCOIL's November 18th-21st 2010 Annual Meeting. The NCOIL Committee invited additional comments on the Model RAA Bill prior to the Annual Meeting.