Judy Faucett

  • Actuary
  • Actuarial Consultant to the NAIC
  • 1991-1992 - SOA - Final Report* of the Task Force for Research on Life Insurance Sales Illustrations, Society of Actuaries - 142p
    • Appendix II - Illustration Examples
  • Ms. Faucet responded that people spend more time buying a microwave than they do an insurance policy.

1994-1, NAIC Proceedings

  • 1991 - SOA - Product, Market, and Distribution Strategies, by Judy Faucett - The Actuary (May) (p7) - 16p
  • Ms. Faucett emphasized the need for substantial education of buyers.

1993-4, NAIC Proc. 

Judy FAUCETT:

  • In line with John's comments, we were told by one group that actually runs focus groups that if you got a group of recent purchasers of insurance in a room, you might get responses of what they think they did or what they think they should have done, as opposed to what they actually did.

1991 - SOA - Illustrations, Society of Actuaries - 20p

Judy Faucett: We contacted a number of regulators during the course of our research.

The California department was gracious enough to pull 80 complaints that they had received from consumers in the last year, a random 80 complaints.

  • Out of those 80 complaints on life insurance, they determined that 35 of them were illustration-related.
  • Fifty-five percent were for reasons you would have expected; that is, the premium didn't vanish when it was supposed to, or the dividends that were paid weren't as high as what was illustrated.
  • The other 45% believed that they had bought an annuity product and didn't even know that they had life insurance?

Maybe there is something that we're not communicating to buyers out there.

We may think that our illustrations are straightforward, but somehow the people who aren't actuaries or agents or who just don't understand insurance, are missing the point.

  • Admittedly, not everybody complains, but the number was a lot higher than we had expected, and it was a very different type of complaint than we had expected.  (p10)

1991 - SOA - Illustrations, Society of Actuaries - 20p

Senator METZENBAUM: Do you think these things are going to happen soon?
Ms. FAUCETT:  Well, I certainly hope they are going to happen in my lifetime.


Senator METZENBAUM:

  • I hope you have a long lifetime, but I sure hope that the insurance industry moves a lot faster than that, and I am not even talking about my lifetime.
  • I think yesterday was too late.
  • I think that for this industry to be guilty of such reprehensible practices and to sit on their hands and do nothing I just believe it is incredible.
  • The only reason they don't do something about it is because the American people don't know about it.
  • I am hopeful that as a result of these hearings they will know more, but I am a realist enough to know that 1 day's news story or commentary, or whatever, with respect to radio or TV does not cause these impregnable companies to move very rapidly.
  • I think it is shameful.
  • In your professional opinion, will this situation get worse for consumers if your recommendations are not adopted by the industry?

Ms. FAUCETT: I don't know that it will get worse, but certainly it will not get any better.

1992 0623 - GOV (Senate) - Consumer Disclosure of Insurance - [PDF-323p-GooglePlay]

Commissioner David Lyons (Iowa) asked Ms. Faucett <NAIC Actuarial Consultant to the NAIC> to describe the quotation by her that had recently appeared in the New York Times.

  • She said she was quoted as saying that if you put 10 actuaries in a room you would get 40 conclusions about what the numbers they were examining meant. 
  • She thought it was important for buyers to see how the policy would work but the current approach <Guarantees Only> of the working group would not allow that to happen.
  • Ms. Faucet responded that people spend more time buying a microwave than they do an insurance policy.

1994-1, NAIC Proceedings


⇒  1993 1030 - NYT - INSURANCE; Confusion Over Policies Leads to Talk of Change, Leonard Sloane - [link]  --  Judy Faucett

The second concern, which is related to the first, is the public credibility of our industry.

  • We've all heard a lot about the junk bond crisis.
    • Is the next crisis going to be junk illustrations?
  • Certainly buyers, agents, third-party advisors, regulators, legislators and even other insurance companies have questioned the credibility and realizability of our illustrations. Industry and professional groups have expressed concern over perceived problems with illustrations. 

--  Judy Faucett

1991 - SOA - Illustrations, Society of Actuaries - 20p