Highlights from the NAIC Fall National Meeting held in October in Orlando include:

  • Retained Assets Accounts (RAA). The 2010 Annual Statement will include RAA interrogatories covering, among other things, life insurance policy claims counts and amounts in RAAs; RAA interest rates credited and spreads; and narrative disclosure on a number of topics, including whether a RAA is the default method. Separately, NAIC staff presented summary results of its survey of major insurers’ current RAA practices. The NAIC’s 1993 RAA “Sample Bulletin” will be updated to address deficiencies in current practices, including disclosures related to interest rates as well as guaranty fund and FDIC coverage (or lack thereof), and is expected to include a requirement that RAA disclosure documents be filed for departmental approval.  
  • Annuity Disclosure. Following an industry trade group discussion of a new section of the Annuity Disclosure Model Regulation on standards for annuity illustrations, the working group moved up the revised model to the Life Insurance and Annuity (A) Committee. The revised model will be exposed for public comment for 30 days, during which time only “new” issues may be raised. Forms of the NAIC Annuity Buyer’s Guide were taken out of the revised model and will be considered separately by the working group. The revised model imposes a new requirement for variable annuities that calls for the NAIC-approved Annuity Buyer’s Guide to be provided.  
  • Stranger-Originated Annuity (STOA) Transactions. Comments were taken on the Model Insurer Bulletin that has been under development since the summer, and a subgroup will incorporate these comments into an updated draft Bulletin to be circulated later this fall for comment. It was reported that many insurers have already incorporated STOA safeguards into their annuity operations to curb abusive practices.  
  • New Market Regulation Initiatives. For 2011, the Market Regulation and Consumer Affairs (D) Committee will undertake two new initiatives: (i) creating a Social Media Working Group to evaluate how insurers and producers are using social media, to identify attendant regulatory and compliance issues, and to provide guidance on how to address such issues, including examinations; and (ii) creating a joint working group with the Health Insurance and Managed Care (B) Committee to review issues related to limited medical benefit plans, including misrepresentations in sales and marketing, product utility, and unauthorized producers.  
  • Long‑Term Care. Industry comments were taken on specific consumer disclosures for communicating rate increases in long-term care insurance policies to existing insureds. Consumer advocates suggested more explicit rate increase disclosure be provided when a policy is purchased. State regulator guidance to ensure compliance with disclosure requirements is under consideration.  
  • NAIC developments on separate account insulation and risk charges, and annuity suitability in the context of the Harkin Amendment, appear elsewhere in this issue of Expect Focus.