1994 – SOA – Problems and Solutions for Product Illustrations, Society of Actuaries – 28p

1994 - SOA - Problems and Solutions for Product Illustrations, Society of Actuaries - 28p

BRADLEY E. BARKS (Chief Product Actuary for LIfeUSA Insurance Company: The subject we are going to talk about is life insurance and disclosure regulation, which the NAIC is working on currently.

(p10 / 578)
MR. BARKS: This issue and the other comments about reality are both related to consumer expectations.
- The vanishing premium is also related to policyholder expectations.
- I would like to ask the panel, if we are trying to make sure that the illustration has a high likelihood of meeting policyholder expectations?
- Is this a goal of this process?
Robert E. Wilcox - Chairman of the Life Disclosure Working Group (NAIC):
- I think it is.
- If we are going to have a group of consumers of our products who are satisfied with what they get, we have to meet their expectations.
- Obviously, there are two adjustment points whereby that can be accomplished.
  - One is that you can change the outcome to match the expectations.
  - The other is to change the expectation to match the outcome.

(p16 / 584)
MR. BARKS: I want to go back a little bit and give George a chance to respond to or add to our list of goals and objectives
George Coleman (Prudential / NAIC Technical Resources Group - TRG)
- What I do not like is "high likelihood of meeting policyholders' expectations."
  - I think when we are talking about that, we are really talking about moving to guarantees and with all the problems attendant thereon.
  - The 44% of the values and benefits paid by Prudential in 1993 were nonguaranteed elements.
  - That is an important aspect of our sales, if we are trying to meet expectations, then I think we have a major problem.
  - If we are selling on the basis that this is going to fulfill your expectations without the disclaimers that are necessary, then we have some major problems.