State insurance regulators advanced 2024 charges today and revealed no plans to confront a full-scale rewrite of the life insurance illustrations model.
The Indexed Universal Life Illustration Subgroup is tasked with providing “recommendations for the consideration of changes to the Life Insurance Illustrations Model Regulation (#582) to the [Life Actuarial] Task Force, as needed.”
That wording is exactly the same as the 2023 charge for illustrations. The list of charges passed with no comment.
LATF met to approve and advance the 2024 charges, which now go up the chain to the Life Insurance and Annuities Committee. After that, the Executive Committee and Plenary has final approval of all charges before the end of the year.
LATF approved a list of 2024 charges for all seven subgroups it oversees.
Bubbling controversy on illustrations
LATF also directed the IUL illustration subgroup to consider changes to Actuarial Guideline 49-A when needed, also the same language as last year. The subgroup adopted AG 49-B, which took effect on May 1, 2023, in the latest effort to bring illustrations in line with reality.
AG 49 was adopted in 2015 to address indexed universal life products created after the original illustration model was adopted. Insurers quickly got around it by offering IUL products with multipliers and bonuses.
That led to AG 49-A in 2020 after this LATF directive: “designs with multipliers or other enhancements should not illustrate better than non-multiplier designs.” But regulators and consumer advocates say the abuses continue.
Last fall, regulators resisted reopening the overarching Life Insurance Illustrations Model Regulation, with some saying it would be a years-long process. Creating the life illustration regulation was a lengthy, acrimonious process before the NAIC adopted it in 1995.
Regulators opted for a “quick fix,” which became AG 49-B. But not before holding a comment period inviting “concepts” to improve the overall model. The subgroup received five comments.
In the meantime, lawsuits over IUL illustrations continue to pop up in the courts.
InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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