Replacements 1035 Exchange Churning Disintermediation Twisting Agency Problems: Policy Replacements A. What information is available on the extent of policy replacement abuses? What steps have individual companies taken to control replacements of existing policies? What procedures have companies adopted to meet the several state regulations regarding replacements? 1961 – SOA – Agency Problems: Policy Replacements, Society…

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Charges 198x – NAIC LIBG – ACLI = Scribe, vs 199x NAIC LIBG – Cude, Kite, Regulators = Scribes Legal Cases  Walker vs LSW Per Thousand NAIC – Universal Life Model Regulation (MDL-585) – (p4) The benefit charges shall include the charges made for mortality and any charges made for riders or supplementary benefits for…

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Expense Allowance Elizabeth MacGowan – Trial – Walker v Life Insurance Company of the Southwest The Model Regulation specifies that the expense allowance shall be that for level premium, level death benefit endowment insurance at the maturity date. The rationale for choosing a “whole life” expense allowance of this sort was thought out carefully. It…

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Roles Roles:  Academic, Actuaries, Consumers, Consumer Advocates, Lawyers, Regulators, BonkNote Insurance Regulators Insurance regulation can generally be described in two simple statements. Insurance regulators want insurers to have sufficient assets to make good on the promises they are selling and they want insurers to treat their policyholders and claimants right. The first part of the…

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AAA – Journal of the American Academy of Actuaries actuary.org/content/publication-archives-academy-journal-1977-1987 Statement 1981-12 – Journal of the American Academy of Actuaries re: Manipulation, Dividends, Life Insurance Buyer’s Guide -12p To: NAIC Life Insurance (C3) Subcommittee From: American Academy of Actuaries Date : June 2, 1981 Background: This statement was presented at a meeting of the Task…

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Valuation Actuary SOA – Committee on Life Insurance Company Valuation Principles – 1980s As Chris indicated earlier, pricing actuaries are in a unique position relative to valuation actuaries since valuation actuaries spend their time monitoring reality. Pricing actuaries, along with actuaries who work in the asset/liability modeling (ALM) area, can influence reality. Their actions are…

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R-Ratio / R-Factor Conseco, Garn Lawsuit, R-Factor In essence, the model regulation <Universal Life Model Regulation> assumes that at issue, all universal life policies are permanent plans. The r-ratio is meant to measure the extent to which the policy is “on track” as a permanent plan. Statutory Valuation of Individual Life and Annuity Contracts |…

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What Policies lead to Confusion / Market conduct issues / Lawsuits? More complex products sold to individual consumers (e.g., universal life policies) tend to generate more market conduct problems than simple products (e.g., term life insurance). 2003 0701 – NCOIL – The Path to Reform – The Evolution of Market Conduct Surveillance Regulation – [PDF-117p]…

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Michael Lovendusky Michael Lovendusky – (ACLI) Dynamic Contracts – Whistling into the winds of change Trade Secrets Focus Groups Lovendusky vs other ACLI before Michael Lovendusky, association general counsel for ACLI, described the NAIC as a conflicted 137-year-old organization and a 13-year-old organization. The older NAIC, he said, worked well with the insurance industry. “That…

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