https://www.retirementplanningscottsdale.com State insurance commissioners are discussing rules, and the Annuity Suitability Working Group held a conference call this week, which produced additional tweaks to Annuity Disclosure Model Regulation 245. The group is a National Association of Insurance Commissioners committee.
The model Regulation 245 allows illustrations only if an index has been around at least 10 years. Insurers say that isn’t a necessary requirement if its components have been around that long.
The issue rose in importance as many insurers developed their own proprietary indices in recent years to respond to the popularity of indexed annuities with cautious clients.
Two significant proposed changes are:
Indexes in existence less than 10 years can be illustrated if: all of their components have existed for at least 10 years; the index value is calculated according to an algorithm that is not subject to discretion; and if the insurer is affiliated with the index provider, indexes published by that index provider are also used by entities unaffiliated with the insurer.
Indexes in existence less than 10 years must include the following disclosures on the first page of the illustration in bold, or a different color type: the date the index was created; notice that the components have existed for at lest 10 years; notice that the index values are based on a algorithm that does not change; notice of the insurer’s relationship to the index provider, if any; notice that any estimates on how the index would have performed before its creation are hypothetical and based on past performance of the components; and notice that future results will be different from the index’s past performance.
Comments on the draft rule change are being accepted through July 1, an NAIC spokeswoman said.
Article written by InsuranceNewsNet Senior Editor John Hilton. Read the full story here: https://insurancenewsnet.com/innarticle/naic-focuses-on-proprietary-indices-in-annuity-illustration-discussion
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