NAIC Proceedings - ACLI

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2016

2016-1

  • April 3, 2016

    • Mr. Lovendusky said that a major item that came out of the ACLI work group was the idea of doing consumer testing to inform any revisions to the narrative summary or policy summary....

    • Mr. Lovendusky said the ACLI work group also discussed whether the best way to accomplish the charge is to develop one simplified disclosure document for each model or whether multiple disclosure documents for each life insurance product— whole, term and universal...

    • He said consumers are mostly confused about options, guarantees and riders. <Narrow Charge, Cude - No>

    • While the ACLI work group

      did not oppose including the Buyer’s Guide, some on the work group thought that revisions to the Buyer’s Guide might work

      instead of revisions to the models. <Cude - No>

2016-2

  • <Mr. Lovendusky - ACLI> said the ACLI work group thinks that most confusion for consumers involves complex products like universal life, and not Simple products like term life. He said consumers are mostly confused about options, guarantees and riders. The ACLI work group was considering asking the life insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved. 2016/4/3 - LIIIWG CC, NAIC Proceedings

  • Emily Micale (ACLI) said that the companies have only shared the sample summaries on a limited basis with Wisconsin, NAIC staff and consumer representatives, with the understanding they would not be shared more broadly at this time. She said they are working on getting the companies comfortable with sharing the summaries more broadly, but only if the use of the summaries is limited to aiding the Working Group in the completion of its 2016 charge. If the summaries are able to be shared, Mr. Wicka suggested, and the Working Group agreed, that a small ad hoc group of the Working Group should be formed to review the summaries in order to better inform the Working Group’s recommendation to the Committee. 2016-2,  Life Insurance Illustration Issues (A) Working Group Conference Call, May 17, 2016

 John Bruins presented the ACLI comment letter

(Attachment Nineteen). He noted that as the states implement NAIC regulations, the regulations are generally applied to new

business only. He said the regulatory focus should continue to be on consistent application of the Life Insurance Illustrations

Model Regulation (#582) across companies. He said the ACLI is concerned about the reaction that may be received from

consumers when their policy illustration changes, even though no changes have been made to the product being illustrated.

He noted that several companies have indicated receiving negative reactions from policyowners when their policy illustration

changed. He said that if inforce illustrations are to change, ample time will be required for companies to make the change.

Life Actuarial (A) Task Force

San Diego, California

August 24–25, 2016

QQQ

 Michael Lovendusky (ACLI) said the ACLI is supportive of developing the policy overview

document, but does not believe that it should be a mandated document. He also said the ACLI does not believe that reopening

either Model #580 or Model #582 is necessary to include the policy overview document. Mr. Lovendusky suggested other

alternatives for including it, such as issuing a bulletin. Mr. Wicka said the Working Group is not in a position at this point to

decide whether it is appropriate to open the models, but will consider this issue at the appropriate time.

2016-3

  • c.􀀃 “Cost Information” Category

    • ” Ms. Micale said the ACLI did not think everything in the compilation document was applicable to term life insurance policies, so it used the term “initial premium mode” so that companies would be able to include the applicable information.

  • Ms. Micale said the ACLI is not opposed to the policy overview and wants to be involved in the development of the content. Mr. Wicka said the Working Group wants industry input. LIIIWG Conference Call , September 20, 2016

2017

2017-1

  • Mr. Lovendusky said he is opposed to embedding the template into a model. He expressed reservations about committing the time and resources that were devoted to the annuity disclosures 10 years ago to the development of a similar template for life insurance disclosures now.   Life Insurance Illustration Issues (A) Working Group, Conference Call, January 9, 2017

  • Emily Micale (American Council of Life Insurers—ACLI) said the ACLI has a life insurance buyer’s guide available on the its website titled, “What You Should Know About Buying Life Insurance.” Ms. Micale said the document was developed in 2014 and is being offered by the ACLI as an alternative to revising the NAIC Buyer’s Guide. Ms. Mealer agreed that there are aspects of the document that the NAIC can draw from, but that it takes a different approach than what the NAIC typically takes. Ms. Neil expressed concern about some of the terminology in the ACLI guide, in particular the use of “cash value” to describe “permanent insurance,” but agreed there is likely some information that could inform the NAIC’s work.  2017-1, Life Insurance Buyer’s Guide (A) Working Group Conference Call, February 7, 2017

  • He <Michael Lovendusky - ACLI> suggested that the Working Group consider two things: 1) relieving insurers of the obligation of providing a Buyer’s Guide by creating an NAIC website to which all consumers could be directed; and 2) considering whether there is a need, with all the information available to consumers online, for a Buyer’s Guide at all.   2017-1,  Life Insurance Buyer’s Guide (A) Working Group Conference Call, March 27, 2017

 

2017-2

Michael Lovendusky (American Council of Life Insurers—ACLI) agreed with exploring having the NAIC as the destination for information on more sophisticated products.  2017/5/19 - LIAC CC, NAIC Proceedings

2017-3

  • Emily Micale (American Council of Life Insurers—ACLI) said she needed additional time to discuss the filled-out template and Mr. Birnbaum’s suggested revisions. Ms. Micale commented preliminarily that the inclusion of client information (i.e., name, issue age, information required to evaluate risk, other information collected, other information we collect about you and risk class) are beyond the scope of the regulation and already part of the application interaction with the consumer. 2017-3, Life Insurance Illustration Issues (A) Working Group Conference Call, October 19, 2017

  • Ms. Micale responded that this is an overview of a term life insurance policy and not a comparison shopping tool. She said it would be unreasonable to require the more than 300 different life insurance companies to provide customized glossaries. Mr. Yanacheak said insurance companies using the same term to mean different things is concerning and an issue that should be resolved. Mr. Wicka said Model #582 already includes a requirement that key terms must be defined. Mr. Wicka asked Ms. Micale to ask ACLI members whether they would support adding a similar requirement to the policy summary in Model #580. Ms. Winer suggested looking into whether the NAIC microsite Insure U would be a good spot for a glossary. Ms. Mealer agreed with Ms. Winer’s suggestion.  2017-3,  Life Insurance Illustration Issues (A) Working Group Conference Call, October 19, 2017

Michael Lovendusky (American Council of Life Insurers—ACLI) said there likely would be an illustration accompanying

more complex products. Mr. Wicka suggested that the policy overview could cross-reference to where additional detail can

be found.

Mr. Birnbaum said he does not believe that the policy overview document alone will fulfill the Working Group’s charge,

however, he supports the development of the policy overview document as partial fulfillment of the charge. He disagreed

with Mr. Lovendusky that an accompanying illustration would reduce the complexity of products for consumers. He said

illustrations add to the complexity. Mr. Birnbaum said the goal of the policy overview should not be to summarize the

narrative summaries required in Model #580 and Model #582. He said the policy overview should highlight the key features

of a policy for comparison to other similar products. He said the categories in the draft were too broad and suggested

subdividing them into more precise categories that better identify exactly what information should be disclosed. He said he

would like to identify just what aspect of cash value should be disclosed to enable consumers to compare policies.

2017-3, Life Insurance Illustration Issues (A) Working Group Conference Call, November 16, 2017

 

2017/11/15, LIBGWG, ACLI Redlined Draft

-- UL <Universal Life>, where policies can continue as long as the cash value is sufficient to pay the policy charges.--

Unlike a term policy, which can end after a specified number of years, permanent life insurance will continue to the policy’s maturity age so long as premiums are paid.

(Note that this isn’t exactly accurate for UL, where policies can continue as long as the cash value is sufficient to pay the policy charges. We may want to make that distinction.)  <<< ----BonkNote: ACLI Wording>>>

d. ACLI

Emily Micale (American Council of Life Insurers—ACLI) said the ACLI would like to share information that was developed by the ACLI public affairs team, in the hope it will be of assistance to the Working Group. She said the ACLI’s public website has a link for consumer information and education, with a category specifically related to the purchase of life insurance. In addition to the “What You Should Know About Buying Life Insurance” consumer brochure, there are several hyperlinks to specific topics in question and answer (Q&A) format. She said, additionally, there is a link to another PDF document,

“Tips for Buying Life Insurance,” which provides a one-page, bulleted, educational information related to the purchase of life insurance both “Before Purchase” and “After Purchase.”  2017-3,  Life Insurance Buyer’s Guide (A) Working Group Conference Call, November 20, 2017

Member Comment: I think the last sentence
is too broad of a statement. If the free  look
period ends, the amount you get back on the
11th day is far different than the amount you
would get back 5 years down the road.

2018

2018-1

2018/3/14, ACLI - LIIIWG CC NAIC Proceedings

Ms. Micale said the ACLI is concerned with data element B(1)(b)(3) "A short statement describing if the premium varies after the first year, and, if so, how premium will be determined."

Ms. Micale asked what information was envisioned in data element "a description of cost of insurance fees needed  to keep the policy in force and how it changes over time"

2019

2019-1

  • Mr. Lovendusky said the ACLI opposes Mr. Birnbaum’s proposed changes, especially the substantially similar requirement. He also said Mr. Birnbaum expands the  efinition to reference Section 5A, when the Oct. 9, 2018, draft references 5A(2). Ms. Winer suggested keeping the Oct. 9, 2018, draft language without the “consumer-oriented” modifier. Mr. Lovendusky suggested using broader language, such as a “document reasonably designed to inform consumers of the basic features of the policy.” Mr. Wicka said he would draft something for inclusion in the next draft.

  • Mr. Lovendusky said the Buyer’s Guide and policy overview serve different purposes—the Buyer’s Guide is a general education piece and the policy overview is narrowly focused on a particular policy. 2019-1, Life Insurance Illustration Issues (A) Working Group Conference Call. December 18, 2018

2019-3

2019/11/15 - ACLI Letter to Richard Wicka, LIIIWG

Should the Working Group believe that further consideration be given to promoting consumer readability and understandability of the policy summaries and policy narratives, the ACLI recommends we go “back to the future” and undertake a fact-finding as to whether, and with regard to which type of insurance policies, an actual problem exists...

Such a fact-finding might profitably begin with a professionally (or perhaps academically) constructed, objectively managed consumer test of representative sample policy summaries and narrative summaries.

Examination of the Minutes of the past 27 NAIC Working Group teleconferences beginning in 2016 remind us that:
-There was and is no finding of any problem with current policy and narrative summaries for life insurance policies.

...there is an opportunity to innovate a modern approach to educating consumers about life insurance by distributing an NAIC-managed Consumer’s Guide in electronic format...

Illustrations provided at the time of application already contain detailed information about how a policy may perform, under a specific set of illustrated parameters. The information available to appear in a “Policy Overview” or narrative summary already appears in the illustration.

In the absence of evidence of any problem with existing policy summaries and policy narratives, the NAIC elected not to pursue one recommendation made in 2016 by all interested parties, i.e., to consumer-test sample policy and narrative summaries to ascertain how they might be improved for readability and understandability.