Birny Birnbaum

  • Center of Economic Justice - cej-online.org/
  • NAIC Consumer Representative
  • Former Insurance Commissioner - Texas
  • Government Hearings
  • FACI
  • IAIS
  • NAIC Consumer Representative
  • Texas Insurance Commission- Former - Title-?
  • The Geneva Association
  • Mr. Birnbaum
    • said the actuaries are limited in two important ways:
      • 1) they are limited by Model #582 because it was designed 30 years ago before indexed products existed, and it is woefully out of date; and
      • 2) actuaries are not experts in consumer financial disclosures.
    • He said illustrations are a consumer disclosure, and the technical expertise needed is not that of an actuary but of experts in consumer financial disclosure.
    • He said asking the actuaries to fix problems with IUL illustrations would be like asking the Life Insurance Online Guide (A) Working Group to develop reserving requirements for indexed life insurance.
    • He said he urges the Committee to establish a charge to examine and re-engineer life insurance and annuity illustrations for effective consumer disclosure and consistency of principles across similar products.

2022 0811 -  Proceedings - NAIC LIAC - Life Insurance and Annuities (A) Committee - 17p

  • 2016-2, NAIC Proceedings
    • Birny Birnbaum (Center for Economic Justice—CEJ) presented the CEJ comment letter (Attachment Twenty) and the CEJ letter (Attachment Twenty-One) responding to the comments received from the Academy and the ACLI.
  • 2019 0830 - Letter - CEJ / Birnbaum to NAIC (LIIIWG) - Response to Recent Comments by the ACLI and NAIFA, Center for Economic Justice (CEJ), Birny Birnbaum -
    • Policy Overview. "The Premium"
  • 2019 - LIIIWG Letter - ACLI Interfering
  • Policy Overview only at sale
  • Decision Tree, Shopping Guide, 
  • UL - Permanent - Outline
  • 2019 0903 LIIIWG - "Ludicrous" 
  • cej_comments_acomm_200707_revised_ag49 - Pacific Life Illustration
    • ...it should be evident that illustrations – used for selling life insurance products for which consumers transfer some or all of their savings in hopes of achieving future retirement security – are broken and need a major re-imagining and re-engineering to actually protect consumers. (p2)
    • The argument that consumers are demanding ever more complex and opaque products based on exotic, custom-designed indexes with no actual track record is simply preposterous. (p7)
  • 2020 0707 - CEJ to NAIC LIAC - re: Proposed Revisions to AG 49 - 124p
  • 2021 0811 - CEJ (Birnbaum) to NAIC (LIAC) - Response to Questions Regarding the Work of the Life Insurance Illustrations WG - 16p
  • Government Hearings - Birny Birnbaum
    • 2011 0728 - GOV (House)- Insurance Oversight: Policy Implications for U.S. Consumers, Businesses and Jobs - <Part 1, Part 2 is 20111025>
      • [PDF-285p, VIDEO-?]
      • John Huff (NAIC - MO), Birny Birnbaum (CEJ), Gary Hughes (ACLI)- <Part 1>
    • 2012 0724 - GOV (House - Financial Services) - The Impact of Dodd-Frank's Insurance Regulations on Consumers, Job Creators, and the Economy - [PDF-110p , VIDEO-?]

NAIC Groups

2015

2015-1

  • Birny Birnbaum (Center for Economic Justice—CEJ) expressed support for appointing the working group.
    • He suggested that, as the working group works to complete the charge, it keep in mind that the method of distributing the Buyer’s Guide is just as important as its content.
    • Mr. Birnbaum said it is also important that the working group identify the particular target audience for the Buyer’s Guide; i.e., individuals purchasing life insurance products as an investment vehicle versus individuals purchasing life insurance products for their death benefits.
    • He also suggested that the working group consider the work of the Market Regulation and Consumer Affairs (D) Committee related to consumer disclosure best practices.
    • 2015-1, Life Insurance and Annuities (A) Committee, Phoenix, Arizona, March 29, 2015

 

2015-2

  • Birny Birnbaum (Center for Economic Justice—CEJ) ... said it is important that state insurance regulators determine if illustrations are accomplishing what they are intended to accomplish, how they are being used and whether consumers understand them.
  • Mr. Birnbaum also suggested that illustrations should be consumer-tested.
  • Bonne Burns (California Health Advocates) expressed support for Mr. Birnbaum’s comments.
  • She also suggested that the Committee have the proposed new working group include in its work the review of illustrations for life insurance and long-term care (LTC) insurance combination products.
  • Ryan Wilson (AARP) also expressed support for Mr. Birnbaum’s comments, particularly with respect to consumer testing of illustrations.
  • 2015-2,  Life Insurance and Annuities (A) Committee, Chicago, Illinois, August 16, 2015

2015-3

  • Mr. Serbinowski said the Task Force should address the issue.

    • Birny Birnbaum (Center for Economic Justice—CEJ) said the Task Force should coordinate with the Life Insurance and Annuities (A) Committee and offer to spearhead the issue or to act in an advisory capacity.

    • He noted that before any new policy disclosures are implemented, they should be tested by consumers

    • . Mr. Boerner said the Task Force will make the Life Insurance and Annuities (A) Committee ,,,,,,,monitor the developments of the Committee related to the opening of Model #582.  2015-3,  Life Actuarial (A) Task Force National Harbor, Maryland November 17–18, 2015

  • Birny Birnbaum (Center for Economic Justice—CEJ) said that although Model #582 may be uniformly adopted by the states, that does not mean it translates into uniform illustrations provided to consumers.

    • He said one reason for this is that Model #582 is out-of-date and does not reflect new product designs. It also does not reflect consumers’ use of technology to access information. Mr. Birnbaum also reminded the Committee of the illustration issues that resulted in the development of Actuarial Guideline XLIX—The Application of the Life Insurance Illustrations Model Regulation to Policies with Index- Based Interest (AG 49) and broader issues with illustrations.

    • He also expressed support for the Committee revising the Life Insurance Buyer’s Guide. 

    • 2015-3,  Life Insurance and Annuities (A) Committee, National Harbor, Maryland, November 20, 2015

One is intended to be part of the application process that informs applicants about previous premium increases by the company that will issue coverage, and the other is intended to notify a policyholder about a premium increase being imposed and any rights they might have to avoid or manage some or all of that increase.

We appreciate the opportunity to continue to comment on these issues.

Sincerely,

Bonnie Burns, California Health Advocates and NAIC Consumer Representative

Birny Birnbaum, Center for Economic Justice and NAIC Consumer Representative

Brendan Bridgeland, NAIC Consumer Representative

Brenda Cude, NAIC Consumer Representative

© 2015 National Association of Insurance Commissioners 2

Attachment Five-A

Health Actuarial (B) Task Force

11/18/15

2016

2016-1

  • Birny Birnbaum (Center for Economic Justice—CEJ) briefly summarized written comments he submitted to the Working
    • Group. He said that the sections mentioned in the Working Group’s charge refer to or include illustration of some costs and benefits of the product it is describing.
    • He said that because the summaries require the consumer to review the contents of the illustration, this Working Group should be looking at the illustration requirements as well and not leave review of the illustrations just to the technical groups, like the Life Actuarial (A) Task Force.
    • Mr. Birnbaum said that consumer testing is needed to determine what information consumers want and need to make a
    • decision. He said that whatever the Working Group recommends for life insurance policy summaries or illustrations should be driven by consumer needs and consumer-tested to ensure its effectiveness.
  • Mr. Birnbaum identified some deficiencies in the current summaries, such as:
    • 1) a lack of clear and itemized disclosure of fees and charges and potential changes to fees and charges;
    • 2) no indication of risk associated with different products and different investments within a product;
    • 3) a lack of relevant information for comparisons to alternative investments;
    • 4) too many numbers without a clear purpose; and
    • 5) failure to take advantage of and recognize use of mobile and other electronic devices by consumers shopping for financial products. 

      2016-1,  Life Insurance Illustration Issues (A) Working Group, New Orleans, Louisiana, April 3, 2016

Long-Term Care??

  • Mr. Serbinowski suggested that the “if knew” premium represents what existing policyholders should have been paying all along for their policies.
    • Birny Birnbaum (Center for Economic Justice—CEJ) said that if existing policyholders had been offered the “if knew” premium initially, they may have declined to purchase the policy.

  • Mr. Andersen said his proposal is intended to balance preventing financial distress to insurers with fairness to policyholders.

2016-2

Mr. Birnbaum suggested that questions for consumer testing could come from the Assurity white paper, such as whether a consumer can reasonably be expected to understand the consequences of varying payment patterns after reading the summary.

2016-2, NAIC Proceedings

  • Birny Birnbaum (Center for Economic Justice—CEJ) commented on the work of the Working Group.

    • He said that he supports the development of a one- to two-page consumer-oriented overview document, but that this document does not fully address the charge of the Working Group.

    • He said he supports a uniform format for the one- to two-page consumer document and the policy and narrative summaries because some standardization is necessary to achieve the goal of Model #580, the purpose of which is to facilitate consumer comparison shopping. He stressed the importance of consumer testing to ensure the Committee knows what information is helpful to consumers. 

    • 2016-2,  Life Insurance and Annuities (A) Committee, San Diego, California, August 27, 2016

LIIIWG

  • Birny Birnbaum (Center for Economic Justice—CEJ) said the charge of the Working Group is to review the policy and narrative summaries in the two NAIC models. He said that he has seen sample summaries from the companies and that the NAIC should use this opportunity to determine what the summaries are intended to accomplish and whether, in their current  form, they achieve their purpose.
  • Ms.Winer asked if it would be useful to ask states whether they have received consumer complaints about the summaries.
    • Mr. Wicka said that it would be helpful to have that kind of information but that he is not sure it would be possible to track down complaints to that level of detail.
  • Mr. Johnson said he agrees with Mr. Birnbaum that the NAIC should determine what the consumer is expected to get out of these summaries and what it wants to achieve from consumer testing.
  • Mr. Birnbaum suggested that questions for consumer testing could come from the Assurity white paper, such as whether a consumer can reasonably be expected to understand the consequences of varying payment patterns after reading the summary.
  • Mr. Wicka said the Working Group is expected to have a report for the Life Insurance and Annuities (A) Committee by the Summer National Meeting. 
  • He said that a report could include a recommendation that consumer testing is needed. Mr. Wicka agreed that the Working Group should develop specific objectives to include with its recommendations regarding consumer testing.

Birny Birnbaum (Center for Economic Justice—CEJ) presented the CEJ comment letter (Attachment Twenty) and the CEJ letter (Attachment Twenty-One) responding to the comments received from the Academy and the ACLI. He said all illustrations should be subject to the consumer protection provisions of AG 49. He noted that the regulation only applies to illustrations issued after effective date of the regulation, which makes its application prospective. Mr. Birnbaum said there is no empirical evidence that consumers will be confused by the updated illustration. Mr. Serbinowski asked if there might be a compromise solution that would require inforce illustrations to be subject to AG 49 only if used in replacement comparisons.

Mr. Yanacheak noted that the letter from AXA (Attachment Twenty-Two) proposes a similar compromise. Mr. Birnbaum said the CEJ is in agreement with the AXA proposal. Mr. Andersen said discussion on the issue will continue. Life Actuarial (A) Task Force

San Diego, California

August 24–25, 2016

2016-3

2016 1020 -  LIIIWG CC NAIC Proceedings - 2016-3

a. Purpose of Policy Overview Document
Birny Birnbaum (Center for Economic Justice—CEJ)  suggested that the policy overview document should be a tool to aid consumers in comparing plans across companies, but not to choose between types of plans.

Mr. Birnbaum suggested adding more specificity to the charge to “review and revise the Life Insurance Buyer’s Guide in conjunction with Appendix A of the Life Insurance Disclosure Model Regulation (#580).” He suggested referring to consumer testing and developing a guide that could be made available electronically online and on

mobile devices. Mr. Gerhart expressed support for consumer testing and making the guide available electronically, but did

not think the charge needed to be revised. Mr. Ostlund suggested that the charge should stay broad, so the Working Group

would have leeway to decide how best to accomplish the charge. LIAC

 The Mr. Struck said Florida had suggested including, “does the policy qualify for possible dividend payments? Y/N.” He said that even if this is not included in term policies, the Working Group may want to consider listing elements if they may be in whole life policies or universal life policies, and include “not applicable to this policy.” He suggested the information may be helpful to consumers who are comparing different types of policies from the same company. The Working Group discussed this approach. Mr. Birnbaum said he understood what Mr. Struck was saying, but that he still preferred tailoring the policy overview document to the policy being described. Ms. Micale said the ACLI agrees with Mr. Birnbaum on this point. Mr. Wicka said he would keep this item open for discussion once the Working

Group starts drafting.

LIIIWG 

2017

2017-1

“He <Birny-Birnbaum>  said the best predictor of future interest rates are current interest rates.”
https://www.naic.org/meetings1704/cmte_a_2017_spring_nm_materials.pdf

2017-2

2017-3

2018

Mr. Birnbaum said the policy overview is not an addendum to the illustration and suggested that consumers need to see guaranteed interest rates in order to comparison shop.

Mr. Birnbaum said universal life marketed as investment or cash
accumulation vehicles, and the ability to compare options for investments is critical to making a choice.

Life Insurance Illustration Issues (A) Working Group
Conference Call October 9, 2018

2018-3 BB need experts in consumer disclosure

2018/10/18 - NAIC LIIIWG - 

 "The Policy Overview wouldn't  apply except for when the consumer is shopping for the product."

2019

  • The personalized information in the Policy Overview is the premium for the policy – based on information known to the producer or insurer at the time and subject to change based on additional or revised information – and that information can be provided prior to purchase.
  • If an insurer can produce an illustration for a complex, investment type life insurance product prior to the consumer purchase, it is clearly possible for an insurer to provide the premium for a policy prior to purchase.

2019 0830 - Letter - CEJ / Birnbaum to NAIC (LIIIWG) - Response to Recent Comments by the ACLI and NAIFA, Center for Economic Justice (CEJ), Birny Birnbaum - 

2019 0830 - Letter - Response to Recent Comments by the ACLI and NAIFA, Center for Economic Justice (CEJ), Birny Birnbaum

ACLI
  • For anyone following the working group 's efforts, the observer might be surprised at the blatant contradiction and abject hypocrisy shown by Mr. Lovendusky<ACLI> in asking the working group to ignore its charge after routinely taking up the working group's time with diatribes and false accusations against others for recommendations allegedly exceeding the working group's charge.
  • Yet, now, as the working group is finalizing its work, Mr. Lovendusky shows neither embarrassment nor shame for engaging in precisely the same offensive act of which he has accused others. I
NAIFA
  • Despite no participation to date in the working group’s efforts over the past four years, NAIFA decides it needs to now weigh in on the important role of agents in the life insurance sales process and that without an agent to interpret these documents for consumers, the consumers will be lost at sea.
  • Mr. Sanders’s drive-by comments to the working group are based on false assertions and misunderstanding of the working group’s efforts. His comments have no relevance for the current efforts of the working group.

Mr. Birnbaum said the narrative and policy summaries created by the insurance companies to comply with the requirements in Model #580 and Model #582 were wildly different from each other, and the substantially similar language is need in order to not end up with the same problem that led to the charge of the Working Group. 

Mr. Birnbaum said the Working Group’s charge specifically includes how the summaries are “designed, formatted and accessed” by consumers, and the stated purpose of Model #580 is to “require insurers to deliver to purchasers of life insurance information that will improve the buyer’s ability to select the most appropriate plan of life insurance for the buyer’s needs.” 

Life Insurance Illustration Issues (A) Working Group Conference Call - September 3, 2019