One area of current NAIC focus is insurance company separate account operations. A 2008 NAIC survey of life insurers identified a broad array of life and annuity product offerings through separate accounts, many of which products were comparable to, or contained features comparable to, general account products.

As a result, four NAIC working groups have been taking a hard look at various aspects of insurers’ separate account operations and existing laws to determine whether such laws provide appropriate regulatory control in light of insurers’ current practices and products. Given the magnitude of assets held in insurers’ separate accounts, the NAIC is particularly interested in the following issues:

  • Whether assets held in a separate account supporting guaranteed products (or guaranteed elements of variable products) are, or should be, insulated;  
  • Whether these products or features raise guaranty fund issues regardless of whether they include general account guarantees or are legally insulated;  
  • Whether the general account is being adequately compensated for risks the insurer assumes in supporting separate account products guaranteed by the general account; and  
  • Whether using a separate account for certain product designs is appropriate.  

In addition, the NAIC has been evaluating and expanding financial reporting with regard to separate account products, with significant information to be included in the 2010 Annual Statements.

At the NAIC’s Fall National Meeting in Orlando, the Receivership Separate Accounts (E) Working Group was presented with a list of Model Laws, Regulations and other NAIC materials (e.g., Annual Statement Instructions, etc.) pertaining to separate accounts as well as with preliminary results of a survey of the respective states’ positions on select separate accountrelated issues. This survey identified diverging regulatory positions, and we expected significant activity by the working groups, with possible recommendations that certain Model Laws and/or Regulations be modified in 2011.