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KEYWORD EXPLANATIONS FOR LTS AND ADVANCE SERVICESRevised November 2017

LTS KEYWORD Explanation

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Compliance Services Law SurveysIssue Charts / Liaison

ABSENCE MANAGEMENT

Background: Beginning in January 2018, ACLI began tracking supplemental products including absence management, accidental death and disability, dental, fixed-dollar indemnity, hospital reimbursement/confinement, stop loss and vision.

Position:

Web Keywords: supplemental insurance

B

ACCELERATED BENEFITSLong-Term Care Insurance

Position:Support the NAIC Accelerated Benefit Model Regulation. A provision in a life insurance policy that allows payout of part or all of the death benefit while the insured is still alive, if the insured meets the criteria of the provision.

Web Keywords: accelerated death benefit, long-term care insurance

B Life Insurance Contracts (Auerbach) if general accelerated benefit provision or rider for life policy;

Long-Term Care Insurance (McGuffey) if the accelerated benefit is conditioned on receipt of LTC;

LILS # 47 Accelerated Benefits

ACCIDENTAL DEATH AND DISABILITY


Position:


B

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ADVERTISING: HEALTH INSURANCE

Position:Support the NAIC Model Rules Governing Advertisements of Accident and Sickness Insurance and the NAIC Model Unfair Trade Practices Act, which includes provisions regarding insurance advertising. The Model UTPA stipulates specific types of false advertising that constitute unfair trade practices. The Model Rules supplement the UTPA. The purpose of the Model Rules and their interpretive guidelines is to establish minimum criteria to ensure a proper and accurate description and disclosure of an insurance product’s advantages and disadvantages.

Compliance Notes:Determine if DI and LTC are included in the definition of the health insurance by referring to LILS #11 DI and LTC as Health Insurance. Add to the summary if DI and/or LTC are excluded or included. If applicable to DI and LTC and information is available reference whether it follows or deviates from the NAIC Models.

Web Keywords: advertising, disability income, health insurance, long-term care insurance

B Disability Income Insurance (McGuffey)if applicable to DI;

Long-Term Care Insurance (McGuffey) if applicable to LTC;

LILS #11 DI and LTC as Health Insurance.

ADVERTISING: LIFE INSURANCE

Position:Support NAIC Model Rules Governing the Advertisement of Life Insurance, which governs the advertising of life insurance and annuities.

Compliance Notes:If information is available reference whether it follows or deviates from the NAIC Model in the summary.

Web Keywords: advertising, market conduct

B Market Conduct (Auerbach);

LILS # 29 Advertising Filing Records

AGE OF MAJORITY Background:All states have an age of majority. Generally, comes into play with the beneficiary section of insurance policies. At common law, a minor was anyone under the age of 21. Many states have enacted legislation to define a minor as anyone under the age of 18. Minors may disaffirm most contracts at any time during their minority and within a reasonable time after they attain the age of majority. In the absence of a special statute, minors can disaffirm a contract of life insurance.

Position:Monitor any proposal regarding age of majority.

Web Keywords: age of majority, minors

B Life Insurance Contracts (Auerbach)

Market Conduct (Auerbach) if relates to unfair trade practices

LILS #22 Minors Contractual Obligations;

LILS#26 Insurable Interest

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AIDS TESTING: NON-BLOOD TESTS

Position:Oppose any proposals that would prohibit insurers’ use of such tests other than blood tests to detect HIV.

Monitor laws and regs that allow use of saliva and urine tests to detect antibodies for HIV.

Compliance Notes:Include in summary provisions relating to informed consent and testing protocols (usually Elisa-Elisa-Western Blot).

Web Keywords: AIDS, underwriting, risk classification

B Risk Classification (McGuffey)

LILS#12 HIV Testing Protocols

LILS #65 AIDS Checklist

AIDS: GENERALLYRisk Classification: Generally

Position:Oppose any legislative or regulatory proposals that would prohibit insurers from requiring proposed insureds to undergo tests to determine HIV status, or from underwriting on the basis of the results of such tests. ACLI defends insurers' rights to use the results of such tests in the same way that insurers use other medical information.

Support NAIC Medical/Lifestyle Questions and Underwriting Guidelines that, among other things, prohibit underwriting based on sexual orientation and prohibit any adverse underwriting action on the basis of a positive AIDS related test unless an established test protocol (Elisa-Elisa-Western Blot) is used.

Monitor related bills pertaining to AIDS that might affect insurance companies indirectly, include bills seeking to amend state health, civil rights or public accommodations laws especially provisions relating to informed consent; confidentiality of test results, testing protocols often requiring Elisa-Elisa-Western Blot procedure.

Compliance Notes:Include in summary any provision relating to informed consent; also, any other provisions governing insurers right to require or to underwrite on the basis of certain medical tests that diagnose HIV infection.

Web Keywords: AIDS, underwriting, risk classification

B

B

Risk Classification (McGuffey)



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ANNUITIES: GROUPPublic Employees: Pensions

Position:Monitor any proposal concerning annuities issued to plans that are qualified under the Federal pension law, ERISA. Also called Guaranteed Investment Contracts (GICs), Synthetic GICs, Deposit Administration Funds and Unallocated Annuities. In rare states, there are specific statutes regulating the content of group annuities. Usually, states regulate them in a fashion similar to group life, since many states consider annuities as part of the life insurance line.

Compliance Notes:Provisions concerning group annuities and policy provisions. Include any changes to filing requirements in summary.

Web Keywords: annuity, form filing

B Annuity (Lewis);

SR Liaison: Leonard

ANNUITIES: INDIVIDUAL

Variable Contracts: Generally

Position:Monitor any proposal concerning a contract (insurance policy) that promises to make a series of payments for a fixed period of time or over the course of someone's life. There are several types of annuities, including flexible premium deferred annuity, equity index annuity, single premium deferred annuity, joint and last survivor annuity, variable annuity and annual premium deferred annuity.

Compliance Notes:Provisions concerning nonforfeiture, actuarial principles, mortality tables, filing requirements.

Web Keywords: annuity, annuity nonforfeiture, actuarial, deferred annuity, fixed annuity, variable annuity, equity indexed products, mortality tables, form filing

B Annuity (Lewis);

Valuation (Auerbach);

Variable Contracts (Lewis);

SR Liaison: Leonard

ANNUITIES: NONFORFEITURE: INTEREST RATE

Annuities: Group

Annuities: Individual

Background: The minimum nonforfeiture rate, which is the minimum interest rate guarantee that an insurance company can use in an individual fixed annuity contract to determine its cash value, is usually regulated by a state’s insurance code.

Position:Monitor proposals that regulate the guaranteed interest rate when determining the cash value of an individual fixed annuity.

Compliance Notes:NAIC updated the Annuity Nonforfeiture Model Regulation in 2007.

Web Keywords: annuity, annuity nonforfeiture, actuarial, deferred annuity, fixed annuity, variable annuity, equity indexed products, mortality tables, form filing

B Annuity (Lewis);

SR Liaison: Leonard

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ANTI-REBATING Position:Oppose any proposal which would allow an agent to give part of his or her commission or some other thing of value to an insurance applicant to induce the purchase of insurance, or when an insurer deducts an amount from the stipulated premium to induce the purchase. The adverse impact of rebating would lead to increased insurance costs as agents would demand higher commissions to obtain higher rebates, unwarranted replacements and a long-term decline in competition among agents. Rebating is prohibited in all states but two --California and Florida--pursuant to the NAIC Model Unfair Trade Practices Act.

Compliance Notes:Include any changes to express dollar limits in summary.

Web Keywords: anti-rebating, churning, commission, replacement, unfair trade practices


LILS #35 Replacement;

LILS #33 Inducements

ANTITRUST Position:Oppose any bill affecting insurers' current exemption from antitrust laws. Depending upon the scope and nature of bill, could subject insurers to potential litigation in connection with a number of common activities such as participation in life and health guaranty associations.

Web Keywords: antitrust, McCarran-Ferguson Act.

B ADVANCE

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ARBITRATION ALTERNATIVE DISPUTE RESOLUTIONBackground:Alternative Dispute Resolution is a contractually agreed upon method of dispute resolution. This contractual agreement governs any controversy, dispute or claim by a policy owner, insured or beneficiary and the insurer. The contract generally states that any dispute between the parties shall be submitted to binding arbitration for resolution.Position:Support any proposal that allows companies to include clauses in their insurance contracts to resolve disputes with arbitration.Oppose any legislation empowering an arbitrator to award punitive damages or attorney fees.

PUNITIVE DAMAGES AND ATTORNEY FEESBackground:Punitive Damages and Attorney Fees were addressed in August 2000 when the National Conference of Commissioners on Uniform State Laws (NCCUSL) revised the Uniform Arbitration Act (UAA) to grant arbitrators the right to award punitive damages and attorney fees.

Position:Oppose any revision to the UAA that grants arbitrators the right to award punitive damages and attorney fees.Oppose legislation that repeals or strikes the words "interstate commerce" from state arbitration laws. It may be an attempt to use McCarran-Ferguson powers to prevent insurers from invoking the Federal Arbitration Act as the law governing arbitration clauses in their insurance contracts.Monitor all introduced legislation applicable to arbitration agreements/clauses to determine the presence of any of the following key words: Attorney Fees, Punitive Damages, Exemplary Damages, Extra-Contractual Damages, Restitution.

Web Keywords: arbitration,

B ADVANCE

BANKRUPTCY: INSURANCE EXEMPTION

Background:Federal bankruptcy law permits individuals, when filing for bankruptcy, to elect either the federal or the state exemptions (amounts of money, insurance proceeds, and items of personal property that are exempt from the claims of creditors). Insurance policy proceeds and cash values are generally larger under the state exemptions.Position:Oppose any proposal that would reduce the amount of insurance proceeds exempt from the claims of creditors.

Web Keywords:

B LILS #7 Bankruptcy & Creditors

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BANKS: GLBA: SAFE HARBORS Banks: Insurance Powers

Unfair Trade Practices: Generally

Position:Support faithful adoption (i.e., no changes) of the NAIC Amendments to the UTPA relating to GLBA Safe Harbors for bank sales of insurance consumer protection laws. The federal Gramm Leach Bliley Act (GLBA) includes 13 “Safe Harbor” provisions insulating state consumer protection laws addressing bank sales of insurance from federal regulatory preemption. The NAIC developed amendments to the model Unfair Trade Practices Acts to incorporate 11 of the federal provisions in a uniform manner for states to adopt (two provisions related to Privacy were not included in deference to their being addressed by the NAIC Privacy Model Regulation).

Compliance Notes: If information is available mention if follow or deviates from the model.

Web Keywords: bank distribution of insurance, unfair trade practices

B ADVANCE

BANKS: INSURANCE POWERS

Position:Monitor bills that would permit state-chartered financial institutions to sell insurance products, including annuities. Look for bills that would give state banks the same powers as national banks ("parity laws"), which would in effect allow state banks to sell annuities, since national banks are currently authorized to do so.Oppose legislation that would allow banks to underwrite insurance products.

Compliance Notes:Include in summary whether provisions follow Agents’ Model with respect to whether a seller of insurance has to be registered as an agent; and whether there is a separate area required for the transaction of insurance business. Advance if it contains restrictions; do not advance if law merely authorizes banks to sell.

Web Keywords: bank distribution of insurance

B Annuity (Lewis);

Market Conduct (Auerbach)

CAMPAIGN FINANCE

Position:Monitor restrictions on corporate giving.

AB DO NOT ADVANCE

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CAPITAL AND SURPLUS REQUIREMENTSRisk-based Capital

Background:No NAIC model. Determines financial requirements for licensure in a state. By contrast, risk-based capital (RBC) is a post-licensure, financial monitoring system.

Position:Monitor provisions relating to capital and surplus requirement amounts or in-lieu clauses.

Compliance Notes:Include in summary if law or reg enact or amends any provisions relating to capital, surplus, deposit, or risk-based capital requirements including provisions that allow certain certifications in-lieu of financial deposits.

Web Keywords: accounting, capital and surplus requirements, company licensing, risk based capital requirements

B Financial Regulation(Somers)

LILS #10 Capital & Surplus Requirements

ISC NAIC Reserve and Capital Reform

CAPTIVES & SPV USE

SUB-TOPICBackground: The Captive and Special Purpose Vehicle Use (E) Subgroup was formed under the NAIC Financial Condition (E) Committee during early 2012. The Committees directive is to examine insurers' use of captives and special purpose vehicles to transfer insurance risk, other than self-insured risk, in relation to existing state laws and regulations, and establish appropriate regulatory requirements to address concerns identified in this study.

Position:Monitor proposals that would alter captives laws which would expand the use of special purpose vehicles.Oppose proposals altering captives law which would restrict the use of special purpose vehicles.

Compliance Notes: Currently being sent to the Reinsurance Service as a FYI.

Web Keywords: captives

B Reinsurance (Wolf);

SR Liaison: Bryant

COMPANY FEES AND LICENSE

Position:Monitor use of NAIC Uniform Certificate of Authority Application.

Support a uniform approach to licensing on a state-by-state basis.

Compliance Notes:Include in summary the enactment or amendment of fees that must be paid in order for a company to receive a license to transact business in that state.

Web Keywords: company fees and licenses; company licensing

B Life Contracts(Auerbach)

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COMPANY RECORDS RETENTION

Position:Monitor what needs to be retained and for how long. ACLI takes no position on NAIC Market Conduct Record Retention Model Regulation (April 1994).

Web Keywords: record retention

BMarket Conduct (Auerbach)

LILS#13 Record Retention

CONSUMER ADVOCATE

Position:Some state Insurance Departments have added a full-time consumer advocate to their staffs. The person is typically charged with handling consumer complaints but may play a more active role by proposing legislation/regulations perceived to benefit consumers.Oppose legislation to add such an advocate directly in the department or in a separate office that does not report to the insurance regulator.

Web Keywords: consumer complaints, insurance department.

B ADVANCE

CONSUMER COMPLAINTS: COMPANY PROCEDURES

Position:Support any proposal related to complaint records that to be maintained that follows the NAIC Unfair Trade Practices Act.

Compliance Notes:Include in summary toll-free number requirements.

Web Keywords: consumer complaints, unfair trade practices


LILS #46 Complaint Handling

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CORPORATE CONFIDENTIALITY

Corporate Governance

Examinations: Market Conduct

Holding Companies

Own Risk and Solvency Assessment

Risk Based Capital

Valuation and Nonforfeiture

Background:The following NAIC model laws include corporate confidentiality provisions: The Corporate Governance Annual Disclosure Model Act; the Risk Management and Own Risk and Solvency Assessment Model Act (ORSA Model Act); the Model Insurance Holding Company System Regulatory Act (Model Holding Company Act), the Model Standard Valuation Law, the Model Examinations Law, and the Risk Based Capital (RBC) Model Act.In addition, bills may be proposed that contain free-standing corporate confidentiality provisions.

Position:Support any state legislation to enact new laws or amend existing laws to track the following model provisions:(i) Corporate Governance Annual Disclosure Model Act – Section 6. “Confidentiality” and Section 7. “NAIC and Third-party Consultants”(ii) Model Holding Company Act – Section 8. “Confidential Treatment”(iii) ORSA Model Act – Section 8. “Confidentiality”(iv) Model Standard Valuation Law – Section 3.A.(4)(h) -(n) (applicable to actuarial opinions) and Section 14 “Confidentiality” (applicable to actuarial opinions, PBR and other information)(v) Model Examinations Law - Section 5.E. “Publication and Use” and Section 5.F. “Privilege for, and Confidentiality of Ancillary Information”(vi) Risk Based Capital Model Act – Section 8. “Confidentiality; Prohibition on Announcements, Prohibition on Use in Ratemaking”

State proposals relating corporate confidentiality that are not part of a proposal tracking any of the models above should be evaluated based on ACLI Corporate Confidentiality Principles.

Compliance Notes: Summaries should specify whether the corporate confidentiality provision follows or deviates from the model provision.

Web Keywords: confidentiality, corporate governance, financial examinations and reporting, holding company, market conduct examinations, NAIC model regulation, principle-based reserves, risk based capital requirements, standard nonforfeiture law

B Financial Regulation of Insurers (Somers)

Valuation (Auerbach)

ISC Corporate Confidentiality

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CORPORATE GOVERNANCE

Corporate Confidentiality

Officers and Directors

Financial Examinations and Reporting

Background:The NAIC's Solvency Modernization Initiative Task Force created the Corporate Governance (E) Working Group in 2011 in response to a recommendation by the U.S. Financial Sector Assessment Program (FSAP) that it consider issuing more guidance on the corporate governance practices of insurers. The Working Group ultimately agreed to develop a Corporate Governance Annual Disclosure Model Act and an accompanying Corporate Governance Annual Disclosure Model Regulation. Neither the Model Act nor the Model Regulation imposes any new or additional corporate governance standards, policies or procedures on insurers or recommends any best practices or guidelines. Instead, they only require insurers to disclose information about their corporate governance structures and frameworks and related policies and practices. The Model Act contains the actual filing requirement and important confidentiality provisions (which are based on those in the Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act), while the Model Regulation contains the filing procedures and lists the information that needs to be disclosed. The NAIC adopted the Models at its Summer National Meeting in Louisville, KY in November 2014.

ORGANIZATIONPosition:Monitor bills requiring that: (1) majority of directors be independent and be a majority of the Board of Directors; (2) regular meetings of non-management directors be in executive session; (3) nominating committees of the Board be entirely made up of non-management directors; (4) the Audit Committee be made up of Board members who are independent, and some of whom are financial experts; (5) shareholder approval of stock compensation plans to executives that are not is employment-induced; (6) the development and publication of corporate governance guidelines, including specifically the adoption of a code of ethics for corporate officers; and (7) a certification of annual reports by the CEO that no violations of governance standards has occurred.

Oppose legislation that seeks to regulate activity of business corporations in a manner that may be injurious to life insurance companies or create extra administrative burdens to maintain its corporate charter.

ACCOUNTINGPosition:Monitor bills requiring that public accounting firms not engage in consulting services with clients for whom they perform significant accounting functions, such as statements concerning the general condition of the Corporation and certification of annual reports or financial statements expressing an opinion as to their conformance with the general accounting principles. Since life insurance companies are generally subject to a different set of accounting rules, called statutory accounting, we have to be careful that legislative proposals do not intrude on the existing accounting standards developed by the insurance regulator through the codification of statutory accounting principles.

Web Keywords: confidentiality, corporate governance, Dodd-Frank, financial examinations and reporting, solvency

B

B

ADVANCE

LILS #9 Biographical Data

ISC Corporate Governance


OGC Liaison: Mehlman

ADVANCE

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CREDIT REPORTSPrivacyUnderwriting

CONSUMER REPORTS OR INVESTIGATIVE REPORTSBackground: Life insurers typically obtain consumer reports or investigative consumer reports on all persons who apply for large face amount policies. The reports bear on the applicant's credit-worthiness, credit standing, credit capacity, character, general reputation, personal characteristics and mode of living.The Fair Credit Reporting Act (FCRA), enacted by Congress in 1970, imposes duties upon insurers and others who use consumer reports (information obtained from a consumer reporting agency) and/or investigative consumer reports (information obtained through personal interviews with neighbors, friends or associates of the consumer). Insurers may use either type of report when assessing risks or investigating claims. The FCRA also requires that an applicant be notified that a consumer report may or will be made. FCRA, was amended in 2003 by the Fair and Accurate Credit Transactions Act (FACT Act). State laws attempting to limit information-sharing among affiliates are preempted by the FACT Act.

Position:Oppose bills that attempt to limit financial information-sharing among affiliates.

Compliance Notes:Mention in the summary if the use of credit reports is being prohibited, permitted, or limited in a way that affects insurers such as use of credit reports for underwriting purposes or limiting financial information sharing.

CREDIT SCORINGBackground:Most property and casualty insurers use a credit scoring system to evaluate applicants for automobile and homeowner insurance. Persons with less favorable scores correlate with data that suggests a higher than average incidence of claims. There is much legislator/regulator criticism of the scoring system (sometimes called Fair Isaac”) and thus proposals to prohibit the use of such scores to deny or limit coverage.

Position:Monitor legislative efforts to prohibit or limit the use of these scoring systems are not so broad as to interfere with the regular use of consumer reports by life insurers, and report as “B” those that do affect current life industry practices. Bills that clearly limit the scope to P&C insurers, do not need to be reported. Vague language needs to be carefully reviewed and probably reported, at least as an “AB”.

Web Keywords: credit scoring, Fair Credit Reporting Act, privacy, underwriting

B

AB or B

Privacy (Wolf)

Risk Classification (McGuffey) if insurers are prohibited/allowed to use credit reports for underwriting purposes.

LILS #50 Privacy: SSNs

DATA MATCH Position:Monitor legislation requiring life insurers to "match" policy owner and/or payee records with state records of non-custodial parents in owing past-due child support.

Web Keywords: child support, data match

B LILS #32 Data Match

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DEATH WITH DIGNITY

Risk Classification: Generally

Background:Oregon's law provides a framework for the issue. In Oregon, a capable adult resident who has been diagnosed with a terminal illness that will kill the patient within six months may request in writing, from his or her physician, a prescription for a lethal dose of medication for the purpose of ending the patient's life. Exercise of the option under this law is voluntary and the patient must initiate the request. Any physician, pharmacist or healthcare provider who has moral objections may refuse to participate

Position:Monitor bills which legalizes physician-assisted or prescription drug assisted dying with certain restrictions.

Web Keywords: death with dignity, risk classification

B ISC Risk Classification

SR Liaison: Walters

DEFERRED COMPENSATION: 401(K) Public Employees: Defined Contribution Plans

Public Employees: Pensions

Background:401k plans are qualified pension plans and are governed by statutory changes to the Internal Revenue Code or ERISA.

Position:Monitor bills that propose any change to treatment of Section 401k plans, including contribution limits, distribution rules, portability, or catch-up provisions.

Web Keywords: pension

B ADVANCE

DEFERRED COMPENSATION: TAX SHELTERED ANNUITIES

Public Employees: Defined Contribution Plans


Position:Monitor bills that propose any change to group or individual tax-sheltered annuities, including IRAs or 403(b) arrangements. Changes might include modification of contribution limits, distribution rules, portability, or catch-up provisions.

Web Keywords: deferred annuity, IRA, pension

B ADVANCE

DEMUTUALIZATION Background:Demutualization is a corporate transaction always authorized by state statute to convert a mutual insurer into a stock insurer.

Position:Monitor amendments to state statutes on demutualization.

Compliance Notes:Include in summary any financial requirements for conversion, e.g., capital and surplus, deposit requirements.

Web Keywords: mutual

B ADVANCE

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DENTAL INSURANCE


Position:


B

DEPOSIT REQUIREMENTS

Position:Monitor changes in deposit amount requirements to do business in a state.

Compliance Notes:Include in summary if part of longer bill. All states impose deposit requirements on insurance companies as a licensing requirement and these are often found in accreditation or omnibus bills.

Web Keywords: company licensing, deposit requirements

B Financial Regulation(Somers)

LILS#18 Deposit Requirements

DERIVATIVES: NETTING AGREEMENTS

Background:Netting legislation is important to insurers since it gives financial institutions an additional incentive to enter into derivative transactions with them (without incurring an additional charge for the lack of a netting allowance). Such legislation is important to financial institutions since it gives them assurance that their contract obligations will be equally offset against those of an insurer, even if the insurer later enters rehabilitation or liquidation.Despite ACLI's opposition to the Insurer Receivership Model Act (IRMA) when it was adopted by the NAIC in December 2005, netting legislation provides a better and less costly environment for insurers and financial institutions to enter into derivative transactions.

Position:Support state enactment of netting legislation that is identical or substantially similar to section 711 of the Insurer Receivership Model Act (IRMA). Note exclusion of subsection 711hwhich would prohibit netting among insurer’s affiliates.

Compliance Notes:Note any deviations from IRMA and/or if substantially similar to section 711.

Web Keywords: derivatives, IRMA, receivership, rehabilitation and liquidation

B LILS#69 Netting of Qualified Financial Contracts

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DIRECT RESPONSE: TELEMARKETING Electronic Commerce: Generally

Privacy

DIRECT RESPONSEBackground: Direct response is insurance sold without agent involvement usually by means of the mail or telephone solicitation. This type of marketing is regulated primarily under the NAIC Life Insurance Model, which includes specific provisions on direct response sales.

Position:Monitor any proposal regarding direct response marketing.

Compliance Notes:The issues presented above are usually associated with sales to the elderly, limitations on premiums relative to benefits, and tabular illustrations making comparisons with fixed investments.

DO-NOT-CALL TELEMARKETINGBackground: ACLI policy provides that any do-not-call laws or regulations preserve life insurers’, their affiliates’ and representatives’, and licensed life insurance professionals’ ability to contact existing customers with whom the insurer or licensed professional has an established business relationship.

Position:Support a national, preemptive law that would provide uniform telemarketing rules and a national do-not-call list. However, there are a plethora of state telemarketing laws and regulations.

Compliance Notes:This issue arises in connection with legislation or proposed regulations that seek to: (1) prohibit telemarketing solicitations to individuals who have placed their names on do not call registries; and (2) impose requirements applicable to telemarketing solicitations to individuals whose names are not on the list.

Web Keywords: privacy, sales to seniors, telemarketing

B

B

Market Conduct (Auerbach)if in Insurance Code;

LILS #35 Replacement

Privacy (Wolf);

LILS #38 Privacy: Solicitation

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DISABILITY INCOME INSURANCE

Background:DI insurance provides income replacement benefits if an insured is unable to work due to an illness or injury. States regulate DI as a health insurance product; therefore, in addition to bills that directly regulate DI, it is important to examine every health insurance bill for potential impact on DI.Some key issues of concern to DI writers include mental health parity or other mandatory coverage requirements, external grievance reviews, limits on the use of offsets, limits on the use of preexisting conditions limitations, inclusion in the assessment base for health insurance risk pools and restrictions on a company’s ability to develop innovative products (e.g., limitations on the use of activities of daily living (ADLs) in DI policies), underwrite risks, manage claims (e.g., requiring companies to accept a Social Security or medical provider’s disability determination attempt to prohibit the use of discretionary clauses).

Position:Monitor any proposal related to DI.

Compliance Notes:In addition to bills/regs that directly regulate DI, also determine if DI is included in the definition of the health insurance by referring to LILS #11 DI and LTC as Health Insurance. Add to the summary if DI is excluded or included.

Web Keywords: disability benefit, disability income insurance, group disability income insurance, health insurance, mental health parity, Social Security Disability Income

B Disability Income Insurance (McGuffey);

LILS #11 DI and LTC as Health Insurance.;

ISC DI Discretionary Clauses

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DISCLOSURE: SALES ILLUSTRATION

Background:The NAIC has adopted the Life Insurance Illustrations Model Regulation. The regulation applies to all group and individual life insurance policies and provides illustration formats and standards to be followed when illustrations are used. In addition, it specifies the disclosures that are required in connection with illustrations. In addition, the Life Insurance Disclosure Model Regulation requires insurers to deliver information that will improve the buyer's ability to select the most appropriate plan and improve the buyer's understanding of the basic features of the policy that has been purchased or is under consideration.

The Annuity Disclosure Model Regulation specifies the minimum information which must be disclosed and the method for disclosing it in connection with the sale of annuity contracts with the goal of ensuring that purchasers of annuity contracts understand certain basic features of annuity contracts.

Position:Monitor any bill that adopts or amends any of the NAIC models or similar legislation. Staff should review any legislation and regulation that attempts to place onerous requirements on the marketing of variable life insurance policies and annuity contracts; specifically, any attempt to standardize the illustration format and assumptions used in developing the illustration (interest rates, mortality expense charges). Staff should also review any legislation that mentions disciplined current scale and annual report to policyholders.

Compliance Notes:If available add to the summary if it follows any of the NAIC Models.

Web Keywords: disclosure regulation, market conduct, policy disclosure, sales illustrations


LILS #30 Use of Disclosure Documents-Life Insurance and Annuities

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DOMESTIC PARTNERSHIPS OR CIVIL UNIONS

Health Insurance

Life Insurance: Generally

Background:On June 25, 2015, the United States Supreme Court ruled the federal Defense of Marriage Act to be unconstitutional in Obergefell v. Hodges. This decision states the fundamental right to marry is guaranteed to same-sex couples by both the Due Process Clause and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Domestic partnerships, a legal contract between adults to be joined in a relationship, similar to but not the same legally as marriage remain in practice. For our purposes, they are the same as they may affect payment of life insurance proceeds and health benefit payments.Position:Monitor bills regarding domestic partnerships that require domestic partners to register with the state and permit insurers to require an affidavit of domestic partnership.Monitor bills regarding civil unions.

Compliance Notes:Bills are advanced because provisions that extend the same rights and benefits of spouses to partners in a domestic partnership or civil union may impact insurance and annuity benefits. Insurance is not usually specified in the bills, but regulatory action may follow to explain how the new law impacts insurance.

Web Keywords: civil unions, same sex marriage

B ADVANCE

LILS #55 Same-Sex Marriage

SR Liaison: Rowden

ELECTRONIC COMMERCE: GENERALLY

Background:Electronic commerce is a broad term that encompasses electronic activities relating to the marketing, selling, or servicing of goods and services over the Internet or via another electronic medium. Because the area of electronic commerce is emerging new issues arise that may not have been contemplated. This keyword should serve as the “catch-all” for electronic commerce issues that affect the business of insurance generally. Some examples include web site advertising, jurisdiction, content; unsolicited email; etc.

Position:Monitor any proposal related to electronic commerce.

Compliance Notes:Electronic commerce is a general catch-all and could include tax payment or filings too.

B ADVANCE

Privacy (Wolf)

Premium Tax (Witt)

LILS # 62 UETA & E-Commerce Laws Specific to Insurers

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ELECTRONIC COMMERCE: INSURANCE REGULATION

Background:Electronic Insurance Regulation refers to the laws that govern or impact the conduct of insurers vis-à-vis insurance regulators, and contains electronic mandates. For example, laws that require certain forms to be filed electronically, or that a particular security protocol be employed on the insurer’s Web site. Also included are any provisions related to Internet advertising.

Position:Monitor any proposal related to electronic regulation.

Compliance Notes:Include in summary, provisions on annuity form filings and life insurance form filings.

Web Keywords: policy form filing, premium tax

B Annuity (Lewis);

Life Insurance Contracts (Auerbach);

Premium Tax (Witt)

ELECTRONIC COMMERCE: SIGNATURES AND RECORDS

Position:Support the adoption of laws and rules that provide for the legal recognition of electronic signatures and records. The laws and rules should be industry and technology neutral. ACLI fully supports and is seeking adoption of UETA, the Uniform Electronic Transactions Act. UETA, however, must be adopted without exclusions that specifically affect the business of insurance; for example, excluding required insurance notices is unacceptable. Also of interest to our members are requirements concerning an e-signature on an application and subsequent e-delivery of a policy.

Compliance Notes:If available add to summary if it follows UETA or a version of UETA, see LILS #62 UETA & E-Commerce Laws Specific to Insurers.

Web Keywords: electronic business, electronic commerce,electronic signature, UETA, Straight-Through Processing

B Market Conduct (Auerbach)if in Insurance Code

LILS # 62 UETA & E-Commerce Laws Specific to Insurers

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ESCHEAT: UNCLAIMED FUNDS

Background: Abandoned property reporting practices of insurers continue to be investigated by regulators to determine if unfair claim settlement practices exist with respect to unclaimed property. Specifically, at issue is the use of the Social Security Administration's Death Master File (DMF) to stop annuity payments but not to locate beneficiaries for life insurance death benefits. The NCOIL model would require insurers to check database files against DMF on a quarterly basis and to establish procedures when insurer learns of death of insured, but no claim has been submitted.

Position:Support proposal that requires cross check with the DMF on an annual basis.

Oppose Conditionally any proposal that requires a crosscheck more frequently than annually.

Monitor any proposal that places requirements on insurer to cross check policyholder database with the DMF or to establish procedures in cases when insurer learns of death of insured, but no claim has been submitted.

Monitor any proposal concerning policy proceeds held by an insurance company which cannot be paid to the named beneficiary because the company has lost track of the beneficiary. After a period of years, the policy proceeds are paid to the state as required by statute.

Monitor any proposal to shorten the dormancy period.

Compliance Notes:Advance any requirements for cross checking database w/DMF. Also advance if years of inactivity or dormancy period changes and include changes in summary. Advance changes to procedures for reporting and delivering abandoned property to the state. Do not advance changes in procedures for claim filing once property has been delivered to state.

Web Keywords: escheat, unclaimed property

B LILS #20 Unclaimed Funds: Escheat

LILS #71 Unclaimed Funds: DMF Search

ISC Unclaimed Property Developments Survey

SR Liaison: Abbott

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EVIDENCE OF INSURANCE

Position:Oppose legislative and regulatory proposals that would remove the evidentiary status of certificates of insurance used in commercial lending transactions.

Support lender carve-outs from legislation or regulation. Seek deletion of language that would provide that the certificates are used “for information only” and confer no rights to the holder.

Monitor legislation or regulation that would prohibit persons from modifying or altering certificates of insurance in a manner inconsistent with the policy.

Compliance Notes:Summaries should include: “Since many ACLI member companies are active in commercial lending, ACLI is alerting our members to the existence of state insurance department bulletins dealing with proof of insurance.”

Web Keywords: evidence of insurance, property and casualty insurance, real estate

B ISC Evidence of Insurance (RETIRED)

EXAMINATIONS: MARKET CONDUCT


Position:Monitor any proposal concerning examination of companies' market conduct practices.

Web Keywords: confidentiality, market conduct, market conduct examinations

B Market Conduct (Auerbach)


SR Liaison: Walters

FEDERAL HOME LOAN BANK: SECURITY AGREMENT

SUB-TOPICBackground: On October 21, 2012, ACLI’s Board of Directors approved a recommendation of its Insurance Regulation Steering Committee (IRSC) that ACLI (1) support the proposal of the Federal Home Loan Bank - Pittsburgh (“FHLB Proposal”) and (2) assist the FHLB-Pittsburgh (and other FHLBs) in advancing it in the states. The IRSC, Solvency Committee and FHLB Working Group all previously agreed to this recommendation without objection.

Position:Support the proposal of the Federal Home Loan Bank - Pittsburgh (“FHLB Proposal

Web Keywords: accounting, receivership, solvency

B ADVANCE

ISC FHLB Legislation

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FIDUCIARY DUTY

Producers: Sales Practices and Compensation

Background:In April 2016, the Department of Labor finalized a rule defining who is a fiduciary under ERISA. The rule treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA as fiduciaries in a wider array of advice relationships. The new definition may apply to investment advisers and persons who make recommendations to individuals or plan sponsors regarding investments, annuities and other insurance contracts, and rollovers and distributions. The rule also requires the disclosure of any potential conflicts of interest on the part of the fiduciary under the best-interest contract exemption.Some states, in anticipation of and to compliment the federal rule, are proposing similar changes to state law.

Position:Monitor any state proposals to further define a fiduciary or to place further restrictions on who may give investment/financial advice.

Monitor any state proposals requiring financial advisors to provide any of the following: a statement disclosing whether the advisor has a fiduciary duty to the investor, compensation and fee information.

Web Keywords: agent, agents, breach of fiduciary duty, commission, Department of Labor, ERISA, fiduciary, investment advice, investment adviser, producer regulation

B LILS #28 Invest. Advisers/Ins. Consultants

FINANCIAL EXAMINATIONS AND REPORTING

Position:Support NAIC Model Law on Financial Examinations. An examination is required every 5 years; however, many states have changed to 3 years. Confidentiality of report is preserved.

Support NAIC Insurance Regulatory Information System (IRIS) Model Act, which requires insurers to file their annual statement blanks with the NAIC so that this information is captured and various financial ratios can be run on the IRIS database. Confidentiality of IRIS ratios is important. Participation in IRIS is required for accreditation.

Monitor any state adoptions of NAIC’s Accounting Practices and Procedures Manual. Note version adopted by year.

Monitor bills that would impact reporting of company financial information to the states including:

Compliance Notes:In summary, identify by year the version of NAIC Accounting Practices and Procedures Manual that the state is using; also, requirements or options to file financial statements electronically or by diskette. Include provisions relating to annual statements and quarterly statements.

Web Keywords: accounting, annual statement, financial examinations and reporting, financial reporting

B Financial Regulation (Somers);

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FINANCIAL PLANNERS

Position:Oppose proposals where regulatory obligations are triggered by mere usage of term "financial planner" or "financial planning." Financial planning regulations should not apply to individuals where financial planning activities are incidental to their activities as regulated professionals (e.g., insurance agents or broker-dealers).

Web Keywords: producer regulation

B ADVANCE

FIXED-DOLLAR INDEMNITY


Position:

Web Keywords: supplemental insurance products

B

FRAUD: INSURANCE

Position:Monitor bills that would establish penalties for the submission of fraudulent insurance claims; bills that would establish government-run fraud bureaus to investigate and prosecute insurance fraud; bills that would require insurers to establish in-house fraud units or print fraud notices on claim forms or on claim checks.

Compliance Notes:Provisions which include in-house fraud units.

Web Keywords: fraud, insurance department, company operations.

B Market Conduct (Auerbach):

LILS # 43 Fraud

FREE LOOK Insurance Contracts: Generally

Position:Support bills relating to an insurance contract provision which gives an insured a specified period (for life insurance, usually 10 days) during which to examine an insurance policy, and if not satisfied, to return it to the company for a full refund of the initial premium.Oppose free look provisions which apply to interest-sensitive products, especially group annuity contracts.

Web Keywords: free look

B Annuity (Lewis);Life Insurance Contracts (Auerbach);

LILS #24 Free Look

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GROUP INSURANCE: MODEL ACT

Position:Support NAIC Group Model Definition for Life Insurance and Health Insurance (two separate Models).

Web Keywords: group life insurance, health insurance (if applicable to long-term care and disability income)

B Annuity - if group Annuity (Lewis);

Life Contracts - if life only (Auerbach);

Long-Term Care – if applicable (McGuffey);

Disability Income - if applicable (McGuffey);

ISC Group Modernization (RETIRED)

SR Liaison: Mangan

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GROUP LIFE INSURANCE

Background:NAIC model provisions relate to the following areas:

DEPENDENT COVERAGE: Coverage under life insurance policies for dependents of a named insured to include a spouse and unmarried children under a specified age. It is the amount of coverage available to eligible dependents.

UNDERWRITING RESTRICTIONS: Restrictions imposed on the ability of an insurer to examine, accept or reject insurance risks, and on the ability to classify those selected, in order to charge the proper premium for each risk. An example would be a prohibition against using gender (unisex) as an underwriting criterion for purposes of determining premium rates. Also bills that would allow supplementary coverage to be offered to eligible employees and dependents.

CONVERSION: The right of a group life insurance policy certificate-holder to convert to an individual policy without having to furnish evidence of insurability. Usually this must be done within 31 days of termination of employment.

Position:Support NAIC model language and those that have a specific impact on the group life insurance business and practices of member companies.Oppose underwriting restrictions that require a minimum group size, minimum participation of eligible persons or minimum premium contributions by the group policyholder. The Model eliminates these restrictions.

Compliance Notes:Companies are interested in what type of conversion policy must be made available. Insurers do not want to have to provide term products upon conversion. If information is available reference whether it follows or deviates from the NAIC Model in the summary.

Web Keywords: group life insurance, underwriting

B Life Insurance Contracts (Auerbach) contract and filing only


LILS # 15 Dependent Caps on Group Life Insurance

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GUARANTY ASSOCIATIONS

Position:Support NAIC Life and Health Insurance Guaranty Association Model Act. However, when politically feasible, try to exclude unallocated annuities from guaranty association coverage. If exclusion is not feasible, we should try to limit coverage to $1M (the Model provides coverage of $5M per contract holder). The definitions of "member insurer" and the “residents only” provisions contained in the Model Act are required for NAIC accreditation.

Support advertising prohibition. Section 19 of the NAIC Life and Health Insurance Guaranty Association Model Act prohibits companies from advertising the existence of the guaranty association for marketing purposes.

Support a full premium tax offset for guaranty association assessments. The NAIC Model Act includes an optional section that provides for a full offset at the rate of 20% a year over 5 years - we fully support this provision.

Monitor any bill assessing fees against insurers to fund guaranty associations and all bills that do not fall within one of the four categories listed above, e.g., bills that make guaranty association coverage retroactive to cover a specific insolvency.

Web Keywords: advertising, guaranty association, rehabilitation and liquidation, solvency, tax offsets

B

B

B

B

Reinsurance (Wolf);

Market Conduct (Auerbach)

Premium Tax (Witt)

LILS #1 Guaranty Association Summary Documents;

LILS #66 Guaranty Association Coverage Limits;

LILS #67 Guaranty Fund Tax Offsets;

ISC Guaranty Association Legislation;

SR Liaison: West

HEALTH BENEFIT EXCHANGE FUNDING

Background: The Affordable Care Act (ACA) has provided more than $4 billion to date to assist the states in establishing exchanges. Ongoing federal funding ceased as of January 1, 2015 and henceforth state exchanges must be financially self-sustaining. While approaches vary from state to state, most exchanges impose a premium-based assessment or user fee on products sold through the exchanges. Other exchanges are looking at alternative funding sources to sustain their operations without federal funds.

Position:Oppose legislation that seeks to expand the assessment base beyond carriers participating in the exchange.

Web Keywords: assessment, assessments, disability income insurance, health insurance, long-term care insurance

B

ISC Health Benefit Exchange Funding

SR Liaison: Ferguson

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HEALTH INSURANCE

Background:MonitorCOORDINATION OF BENEFITS: Arrangements in the health insurance context to discourage multiple payments for the same claim under two or more policies. When two or more group health insurance plans cover the insured and dependents, one plan becomes the primary plan and the other plan the secondary plan.

DEPENDENT COVERAGE: health insurance coverage for dependents of a named insured to include a spouse and unmarried children under a specified age.

EXTRATERRITORIALITY: Extension of a particular state's group health insurance laws and coverage requirements to all residents of that state, regardless of whether the group health insurance plan is issued in another state or jurisdiction.

MANDATED BENEFITS: Health insurance policy benefits that insurers are mandated by law to provide; e.g., chiropractic care, optometric care, screening for specified diseases. The types of mandated benefits usually vary from state to state.

CONTINUATION/CONVERSION: The right of a group health insurance policy certificate holder to convert to an individual policy without having to furnish evidence of insurability or to continue coverage under the group health policy. Usually this must be done within 31 days of termination of employment.

PREFERRED PROVIDER ARRANGEMENT: An arrangement through which an insurer contracts with a group of medical care providers to furnish services at lower-than-usual fees in return for prompt payment and a certain volume of patients.

UNDERWRITING RESTRICTIONS: Restrictions imposed on the ability of an insurer to examine, accept or reject insurance risks, and on the ability to classify those selected, in order to charge the proper premium for each risk. An example would be a prohibition against using gender (unisex) as an underwriting criterion for purposes of determining premium rates.

Position:Monitor bills/regs that have a specific impact on the health insurance business and practices of member companies that pull in DI and LTC only. See topics below. Also refer to your binder on Guidelines on Bill Reporting for priority designation.

Compliance Notes:Determine if DI and LTC are included in the definition of the health insurance by referring to LILS #11 DI and LTC as Health Insurance. Add to the summary if DI and/or LTC are excluded or included and if they follow or deviate from the NAIC model.

Web Keywords: assessment, assessments, health information, health insurance

ABB

Refer to Guidelines on Bill Reporting for priority designation.

Disability Income Insurance (McGuffey)if applicable to DI;

Long-Term Care Insurance (McGuffey) if applicable to LTC;

Risk Classification (McGuffey) if genetic testing applicable to LTC or DI;

LILS #11 DI and LTC as Health Insurance;

ISC Health Insurance Reserves Model Reg.

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HOLDING COMPANIES


Position:Support NAIC Model Insurance Holding Company System Regulatory Act and the NAIC Insurance Holding Company System Model Regulation with Reporting Forms and Instructions, which govern insurer organization and acquisition of one or more subsidiaries. Section 5(B) of NAIC Model Act provides a standard for triggering the reporting of extraordinary dividends. ACLI opposes this "lesser of" standard and supports the "greater of" definition or the "Illinois alternative."

Compliance Notes:Both laws on the insurance company holding acts are advanced but regs that relate solely to reporting forms and instructions are not. Include in summary any amendments relating to the reporting of extraordinary dividends. Otherwise, summary can state in general that law or reg relates to (1) insurance company holding act; and/or (2) forms and filing instructions relating to holding act.

Web Keywords: acquisition of life companies, confidentiality, form filing, holding company, reinsurance


Reinsurance (Wolf);

Market (Auerbach)

ISC Holding Company Act / ORSA


SR Liaison: Walters

HOLOCAUST CLAIMS

Position:Monitor legislation that provides for the recovery of proceeds from insurance policies issued to victims of the Holocaust; legislation that requires insurers that sold insurance policies to persons between 1920 and 1945 to submit certain information to the Insurance Department regarding those policies and/or claims; and legislation granting or expanding private rights of action against insurers for claims arising out of the Holocaust.

Web Keywords: claim

B ADVANCE

HOME SERVICE LIFE INSURANCE

Position:Monitor proposals concerning life insurance sold through a distribution system utilizing full-time agents to both sell and service the products, which are usually of smaller face amounts. The agent is often assigned to a specific geographic territory and personally collects the premiums on a regular basis.

Web Keywords: small face amount policy

B ADVANCE

HOSPITAL REIMBURSEMENT/CONFINEMENT


Position:


B

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INSURABLE INTEREST

Background: INSURABLE INTEREST: GENERALLY: A reasonable expectation of benefit or advantage from the continued life of another person. Traditionally, a person has an insurable interest in the life of another if they are related by blood or marriage or if they have a business, including employer-employee and charity-donor, relationship that will cause the beneficiary to suffer a financial loss upon the death of the insured. Insurable interest laws serve a public policy purpose deterring wagers on human life.STOLI: State legislatures around the nation are considering legislation to address stranger-originated life insurance (STOLI). The bills are based on the models developed by the National Conference of Insurance Legislators (NCOIL) and National Association of Insurance Commissioners (NAIC).

Position:Support NAIC model with a five-year settlement prohibition.

Support NCOIL model prohibiting STOLI.

Oppose bills that expand insurable interest laws beyond current limits in order to permit individuals to “loan” their insurability and charities to “rent” their insurable interest to outside investors. Such legislation (1) serves no public interest; (2) offers only ancillary benefit to the charity which is outweighed by the risk to the fundamental purposes of life insurance; (3) permits the use of insurance products in ways that do not fulfill any insurance purpose; and (4) risks reputational damage to the life insurance industry because media and consumers fail to distinguish life insurance from life settlements.

Oppose mortality arbitrage amendments to state insurable interest statutes extending authorization of “charitable organizations” to own life insurance policies on the lives of individuals, presumably officers, directors, and significant donors, to trusts or other similar entities designated by the charity. This is done by expanding the definition of “charitable organization” to include a “corporation, partnership, limited liability company . . . designated by the charitable organization.” These proposals are intended to facilitate transactions based on “mortality arbitrage.” These transactions involve investors who fund the purchase of immediate annuities sufficient to pay the premiums on life insurance policies (and some return on their “investment”) on donors to the named charity. The life insurance proceeds, when the insured die, will go first to the investors to repay their investment and only any remaining funds will then go to the charity.

Support modernization or codification of trust insurable interest that conforms with NCCUSL model guidance.

Compliance Notes:May include a risk classification component when it relates to life insurance application questions to identify and prevent stranger-originated life insurance.

Web Keywords:charitable gifts, insurable interest, STOLI

B Annuity (Lewis);

Life Contracts (Auerbach);

Risk Classification (McGuffey) – if provision relates to questions in life insurance policy application;

ISC STOLI / STOLI Maps (RETIRED)

LILS #26 Insurable Interest

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INSURANCE CODE: RECODIFICATION

Position:Monitor. Periodically, a state will revise and update its entire Insurance Code, revamping a great number, if not most, of its provisions.

Compliance Notes:Advance substantial changes only as they correspond to keyword list.

ABB

INSURANCE CONTRACTS: GENERALLY

Position:Monitor any bill that addresses the insurance contract and is not covered by any other keyword (i.e. cancellation).

B Life Contracts (Auerbach)

INSURANCE DEPARTMENT: ADMINISTRATIVE PROCEDURES

Position:Monitor bills that affect an Insurance Department’s rulemaking power and procedures, as well as legislation impacting an Insurance Commissioner’s regulatory authority.

Compliance Notes:Only of importance if it changes procedures such as rulemaking that could affect hearing, comment, address, or rule publishing.

Web Keywords: insurance commissioner, insurance department

AB DO NOT ADVANCE.

INSURANCE DEPARTMENT: FUNDING

Position:Monitor any proposal related to insurance department funding.

Compliance Notes:Adequate funding is a component of NAIC accreditation. Pay special attention to assessments, fees and penalties that are "dedicated" to department funding.

Web Keywords: assessment, insurance commissioner, insurance department,

B ADVANCE if specify insurers’ assessments, fees, or penalties, etc., dedicated to insurance department.

INSURANCE DEPARTMENT: PENALTIES

Position:Monitor any proposal related to penalties for violations of specified Insurance Code provisions.

Compliance Notes:Generally, we go by the assumption that insurers are conducting business within the scope of the laws and regs.

Web Keywords: insurance commissioner, insurance department, insurance regulation


Premium Tax (Witt)

LILS #19 Disciplinary Action (RETIRED)

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INSURANCE: GENERALLY

Background:A "catch-all" keyword to be used when there is no other appropriate keyword.

Web Keywords: insurance commissioner, insurance department, insurance regulation

ABB

ADVANCErelevant sections.

INSURER DISCLOSURE: LAPSE OR SURRENDER ALTERNATIVE

Background: Twenty-nine states have enacted a statute and/or regulation requiring life insurers to notify policy holders of potential alternatives to lapse or surrender. Some of the state statutes, as well as the NCOIL Life Insurance Consumer Disclosure Model Act, require life insurers to inform policyholders that a life settlement is one of many options to lapse or surrender. Typically, the advocates for the notice requirements are life settlement providers, brokers and investors. The disclosure proposal may also require life insurers to issue the notice under specific circumstances or certain requests by the policyholder.

Position:Oppose: ACLI opposes requirements that insurers provide notice/disclosure to policyholders who are considering changes in the status of their policy. Insurers voluntarily provide policyholders with information about alternatives to lapse or surrender. Further, notices are redundant, costly, and ultimately will increase the cost of insurance for young families and businesses needing financial protection. However, in spite of ACLI’s efforts to prevent additional states from enacting disclosure laws and regulations, policy-makers may insist on approving of a notice/disclosure requirement. In that situation, ACLI may offer alternatives to more onerous language.

B LILS #54 Life Settlement Requirements

SR Liaison: Rowden

INTEREST: DEATH CLAIMS

Background:Interest required by state law because of delay in payment.

Position:Support a rate that is the greater of: (1) the rate for funds left on deposit or the settlement option rate applicable to the policy; or (2) the current short-term rate of interest under Internal Revenue Code § 1274(d). While ACLI supports date of death as the trigger date for the payment of interest, it does not actively seek to change any existing law or regulation that provides for a trigger date other than date of death. State legislation should include group life insurance products and accidental death, because there is no sound basis to exclude them. State legislation should not include annuities and variable products, as these typically provide participation after death. Credit life insurance should be excluded. ACLI supports application of a state’s law to policies issued or delivered for issue within the state. Fall back to residency of insured if necessary. In the event of a fallback, greater uniformity for interest rate and trigger date may help to mitigate conflicts.

Compliance Notes:Interest rate change is of importance and worth mentioning in the summary.

Web Keywords: accelerated death benefit, accidental death benefit, annuities, annuity, claim, claims payment


LILS # 27 Death Claims;

SR Liaison: Leonard

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INTEREST: POLICY LOANS

Background: The NAIC Model Policy Loan Interest Rate Bill pegs maximum policy loan interest rates to Moody's corporate bond index which reflects other interest rates in the general economy.

Position:Support the NAIC Model. All 50 states have adopted the Model. The only thing to keep an eye on is states changing the interest rates.

Compliance Notes:Interest rate change is of importance and worth mentioning in the summary. If information is available mention whether it follows the NAIC model.

Web Keywords: disclosure regulation, policy

B Market Conduct (Auerbach)if loan interest rate disclosures to policyholders

Life Insurance Contracts (Auerbach)

LILS #31 Interest Rates on Policy Loans

INTEREST: USURY Position:Monitor any proposal related to the maximum legal rate of interest that the state allows a creditor to charge. Usually not an Insurance Code provision.

Web Keywords:

AB DO NOT ADVANCE.

INTERSTATE COMPACTS

Background:In October 2003, the ACLI Board voted to endorse the NAICs Interstate Insurance Product Regulation Compact (IIPRC), finding it to be consistent with ACLI’s objective of improving the uniformity and efficiency of the state-based process of product regulation. The Compact promotes uniformity through application of national product standards and enhances the efficiency and effectiveness of the way insurance products are filed, reviewed and approved.Compact can receive filings in individual life, annuity, disability income, and long-term care products. States may opt out of one or more lines of business. ACLI's position is to oppose any opt out.

Position:Support enactment of the compact in those states where the insurance commissioner is seeking enactment of, or actively supporting, the legislation.Oppose Conditionally the opt out of one or more lines of business.

Compliance Notes:If information is available mention whether it follows the NAIC Compact Model. Include opt outs, if any.

Web Keywords: interstate compact

B Annuity (Lewis);

Disability Income Insurance (McGuffey);


Long-Term CareInsurance (McGuffey);

ISC Interstate Compact (RETIRED);

SR Liaison: Waiters

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INVESTMENTS

Derivatives: Netting Agreements

Background:All states have laws that govern the investment transactions of insurance companies.DEFINED LIMITS MODEL: ACLI has no position no formal position on the Investments of Insurers Model Act (Defined Limits version) since it applies only to domestic insurers. (A set of corrective amendments prepared by ACLI members are available to members in states proposing this Model).DEFINED STANDARDS: As with the Defined Limits version, ACLI has no formal position. Generally, our members favor this type of investment law. If asked, we would support their efforts to get it enacted. No changes needed from Model.DERIVATIVES: These are instruments widely used by insurers in order to custom design and make more predictable, performance-wise, their investments. Like other investment issues, this subject is covered in the NAIC Models and we would not bulletin or advance unless the bill was extraterritorial or some other unique issue was raised to create problems for the investment practices of insurers. There are special annual statement reporting and accounting issues, but they are applied by rule, not legislation.

Position:Monitor eligible investments and extraterritoriality; also provisions relating to NAIC accreditation program standards requiring a diversified investment portfolio for domestic insurers, both as to type and issue including requirement for liquidity.Oppose defined limit model bills that apply to all licensed insurers.

Web Keywords: derivatives, financial examinations and reporting, investment

B

AB

B

Financial Regulation (Somers)

DO NOT ADVANCE

ADVANCE (if netting)

INVESTMENTS: CREDIT DEFAULT SWAPS

Background:NCOIL's Credit Default Swaps Model Law regulates credit default swaps (“CDS”) as a form of financial guarantee insurance, and would require CDS issuers to be regulated by the state insurance department as financial guarantee insurers. Life insurers use credit default swaps in managing the risks of their long-term assets and liabilities, particularly in their significant bond portfolios. Regulating CDS issuers as financial guarantee insurers under state insurance laws could provoke a reduction in the breadth and depth of the CDS market, making it harder for life insurers to manage the credit risk in bond portfolios efficiently and cost effectively. Uniform, substantive federal regulation of CDS is most appropriate.

Position:Oppose regulation of credit default swaps as financial guarantee insurance in the states.Support federal pre-emption of state regulation in this market.

Web Keywords: investment

B

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INVESTMENTS: FOREIGN DIVESTMENT: STATE PROCUREMENT

Background: 22 U.S.C. §8532 (a) of the Federal Comprehensive Iran Sanctions, Accountability, and Divestment Act, provides that “It is the sense of Congress that the United States should support the decision of any State or local government that for moral, prudential, or reputational reasons divest from, or prohibits the investment of assets of the State or local government in, a person that engages in investment activities in the energy sector of Iran, as long as Iran is subject to economic sanctions imposed by the United States.”

Position:ACLI appreciates and understands the intent of the federal and state legislation. ACLI does not oppose such legislation, but is looking for uniformity and consistency between the federal and state standards, including a common list of persons engaging in investment activities in Iran.

Engages in Investment Activities in Iran” Definition Conform any state legislation to the federal definition of “engages in investment activities in Iran” per 22 U.S.C. §8532(c).

Dollar ThresholdSeek uniformity in the states with the $20,000,000 million threshold per 22 U.S.C. §8532(c).

Opportunity for HearingSeek 90 days written notice that a measure is to be applied and that the person may demonstrate that the person is not engaging in investment activities in Iran (i.e. right to cure).

Ability to CorrectEnsure that the legislation addresses the opportunity of a person to cure an incorrect certification within 90 days before application of penalties.

Effective DateEnsure that the legislation addresses investment activities that were made BEFORE the effective date of the law either through the “case-by-case” approach (CA, IN and NY) or the Indiana “at the time of the extension of credit” approach.

Creation/Update of List Seek recognition of a common list, perhaps based on the California “list”, for uniformity purposes.

PenaltiesSeek uniformity with CA, IN or NY penalties, when appropriate.

Do Not Oppose if legislation has elements listed above

Monitor if legislation has elements listed above

Web Keywords: state investment laws

B ADVANCE

ISC Iranian Investment Legislation

SR Liaison: Rowden

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LAPSE NOTICE Background:Track any type of legislation that would mandate that an insurer send lapse notices to policy owners when lapse appears imminent. Digests for bills should specify the types of products (life, LTC, DI) requiring the notice.The bills vary in their requirements but may include that notices be sent within a certain time period and/or sent by a particular mode, such as via registered mail, return receipt requested.A related legislative initiative which may be included in the lapse notice bills requires insurers to permit life insurance policyholders to designate a third party to receive notice of cancellation. These bills were at first limited to seniors but more recently bills have proposed third party designations for policyowners of all ages. Please note that a similar requirement is found within the NAIC Long-Term Care Insurance Model Act and applies to long-term care insurance policies.

Position:Monitor proposals which create a requirement for a lapse notice or amend an existing requirement.Monitor provisions requiring notices to be sent to the POLICYOWNER via first-class mail with an opt-in for electronic delivery; providing a grace period of 30/31 days with exclusion for policies upon which premiums are paid monthly or at more frequent intervals; and providing at least a 6-month delayed effective dateOppose/Oppose Conditionally proposals requiring notices to be sent by certified mail; requiring special labeling on envelopes containing lapse notices; requiring notices to be sent to the INSURED, instead of the policyowner; requiring notices to be sent to the past agent of record; or providing a grace period beyond 30/31 days.

Compliance Notes:Include in summary the timing and delivery requirements and the effective date for compliance.

Web Keywords: grace period, lapsed policy

B Life Insurance Contracts (Auerbach)

ISC Lapse Notice

SR Liaison: Rowden

LEGISLATIVE PROCEDURE

Position:Monitor any proposal that refers to changes in the ways in which bills can be introduced, heard, or adopted in the state legislature.

AB

LEGISLATIVE STUDIES

Position:Monitor any proposal to conduct a study, usually in the interim (between sessions), on a “hot topic” to the insurance industry.

ABB

ADVANCEIf high priority issue

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LIFE INSURANCE: COST OF INSURANCE

Life Insurance: Verification of Coverage

Position:Oppose proposals requiring specific written disclosures to each policy holder of a universal life or similar policy, within [x] days of a proposed cost of insurance increase.Oppose proposals requiring insurers provide the Insurance Commissioner with certain filings not later than [x] days of a proposed cost of insurance increase.

Compliance Notes:

Web Keywords: disclosure regulation, STOLI

B

LIFE INSURANCE: GENERALLY

Background:A general keyword for life insurance bills for which a more specific keyword can't be found.

Position:Monitor any proposal relating to life insurance

ABB

ADVANCErelevant sections

LIFE INSURANCE: MULTIPLE POLICY SEARCHES

Position:Support Multiple Policy Search Standards Model Regulation (2003) which sets forth guidelines for insurers to utilize to search for additional policies or insurance coverages on the life of an insured upon notification of the death of the insured. Also provides for a “reasonableness” standard, allowing companies to adopt their own written claim processing standards and methodology for searching multiple policies for the same insured.

Web Keywords: claim, claims payment, escheat

B ADVANCE

LIFE INSURANCE: RESCISSION

Market Conduct

Position:Oppose provisions to prohibit insurers from rescinding policies on the basis of misrepresentation or false warranty.

Web Keywords: life insurance, market conduct, rescission

B ISC Return of Premium Legislation (RETIRED)

LIFE INSURANCE: SETTLEMENT OPTIONSRetained Asset Accounts

Position:Monitor proposals concerning life insurers offering applicants a number of ways to provide income to their beneficiaries rather than payment in a lump sum (i.e., interest income option, income for a fixed period option.)

Compliance Notes:Include in summary any provisions which provide disclosures to policyholders.

Web Keywords: claims payment, retained asset accounts.



LILS#70 Retained Asset Accounts

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LIFE INSURANCE: SMALL FACE AMOUNT POLICIES

Background:The marketing of “limited benefit” life insurance products to persons 60 and older and in low face amounts is a subject of increasing regulatory interest in a number of states. Regulators are concerned that, after a number of years the total premiums paid can exceed the face amount. The State of Washington, for example, effectively barred the marketing of such products by establishing a pricing ceiling in 1990. Since then, the NAIC and other states have considered Washington’s approach as well as proposed other ways of limiting the sale of these products.

Position:Support the 2005 NAIC Disclosure for Small Face Amount Life Insurance Model Act (which covers policies with a face amount of $15,000 or less) to require that a more specific disclosure be provided to potential policyholders. The disclosure requires insurers to clearly and prominently disclose, on or before policy delivery, the length of time until the policy premiums will exceed the face amount and available premium payment or product alternatives. If no alternatives exist, the insurer must clearly and prominently disclose there are no such alternatives. The ACLI Board endorsed the Model Act with these amendments, recognizing that the new Model represents the least onerous option of those being considered by the regulators, such as premium rate caps or loss ratio requirements. ACLI the amended Model in those states that believe further regulation of small face amount products is necessary.

B Market Conduct (Auerbach): sales and marketing

LIFE INSURANCE: VERIFICATION OF COVERAGE

Viatical Settlements

Background: Verification of coverage for life insurance policies form was included in NAIC Viatical Settlements Model Regulation.

Position:Oppose legislation requiring insurers to verify coverage including any insurer intention to rescind the policy for lack of insurable interest within a short time frame. Without such notification within the VOC time period to contest the validity of the policy, it could be declared judicially valid and the insurer stopped from subsequently challenging its validity.

Compliance Notes:

Web Keywords: form filing, verification, viatical, viatical settlements

B LILS #54 Life Settlement Requirements

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LONG-TERM CARE Background:Insurance that provides benefits for services for chronic care conditions over an extended period of time when there is an inability to perform certain activities of daily living or there is a cognitive impairment.

NAIC MODEL:Position:Support the entire Model Act and Model Regulation. The NAIC LTC Insurance Model Act and Regulation seek to promote the availability of LTC insurance and to establish standards, guidelines and consumer protections for LTC insurance.

HIPAA:Position:Support HIPAA tax classification for “qualified” LTC policies. The Health Insurance Portability and Accountability Act established provisions that provided for federally tax qualified LTC plans.

STATE EMPLOYEE COVERAGE:Position:Support LTC Insurance offered in a state benefit plan for state public employees.

Compliance Notes:In addition to bills/regs that directly regulate LTC, also determine if LTC is included in the definition of the health insurance by referring to LILS #11 DI and LTC as Health Insurance. Add to the summary if LTC is excluded or included. If information is available mention whether it follows the NAIC model.

Web Keywords: health insurance,long-term care deduction,long-term care insurance, long-term care partnership,long-term care tax credit

B Agents Licensing (Somers) only if relates to agent licensing or training;

Long-Term Care Insurance (McGuffey);

Premium Tax (Witt) only if relates to long-term care tax credit;

LILS #11 DI and LTC as Health Insurance;

LILS #8 LTC Rate Filing

ISC Long-Term Care Legislation

LONG-TERM CARE: TAX INCENTIVES

Position:Support state tax credits and/or deductions that reduce the cost of LTC insurance by reducing taxable income or offsetting taxes directly.

Web Keywords: long-term care deduction,long-term care insurance, long-term care tax credit, tax credittax incentive, taxes

B Long-Term Care Insurance (McGuffey) only if relates to LTC tax deduction;

Premium Tax (Witt) only if relates to LTC tax credit

LILS #63 LTC Tax Incentives

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MARKET CONDUCT

Background:Applies to the regulation of a number of business practices. found in the NAIC Model Market Conduct Examination Handbook: examinations, company operations and management, unfair trade practices, marketing and sales, underwriting and rating, policy forms and endorsement filings and approvals, policyholder service, claims practices, agents licensing and conduct, and complaint handling.In 2006, both NAIC and NCOIL adopted versions of The Market Conduct Surveillance Model Act to establish a framework for Insurance Department market conduct actions in identifying problems, remedying problems, and coordinating action among states. ACLI supports the NCOIL model which with respect to insurance department action employs "shall" as opposed to the NAIC model which employs "may"

Position:Monitor amendments to or adoption of the NAIC or NCOIL Market Conduct Surveillance Model.

Compliance Notes:Mention whether it follows the NAIC or NCOIL model.

Web Keywords:antirebating, claim, company operations, company records retention, market conduct, market conduct examinations, marketing, military sales, policy form filing, unfair trade practices, sales illustrations, sales practices and compensation, sales to seniors, travel underwriting, underwriting


LILS #39 Agents Investigation;

LILS #41 Adverse Underwriting Notification;

LILS #29 Advertising Filing Records;

LILS #46 Complaint Handling;

LILS #30 Disclosure Documents;

LILS #43 Fraud

MENTAL HEALTH PARITYDisability Income Insurance

Long-Term Care

Background;Mental health parity is a requirement that benefits (individual policy or group certificate) provide the same coverage or benefits for physical and mental health conditions. While mental health parity bills can affect both DI and LTC, such requirements are of particular concern to DI writers, since coverage for disabilities arising from mental health conditions is often more limited than coverage for other conditions.

Position:Monitor bills that implement the federal law which limits the requirement to medical insurance.Oppose bills that specifically apply the requirement to DI or LTC or apply requirement to all health insurance in a state that includes DI or LTC in the definition of health insurance.

Web Keywords: disability income insurance, health insurance, long-term care insurance, mental health parity

B ADVANCE if applies to Disability Income.

Disability Income Insurance (Witt);

Long-Term Care Insurance (McGuffey)

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MINORS: GIFTS/TRANSFERS

Position:No position on either the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act. Both developed by the National Conference of Commissioners on Uniform State Laws. All states have one or the other. The only change to look for is the age of the minor.

Monitor as a “B” bill if it specifically imposes new obligations on insurers. For example, in 2006 Washington amended its Uniform Transfers to Minors Act to require an insurance company to place a warning on custodianship forms that informs the transferor that exercising the option to extend custodianship may result in the transfer not qualifying for annual exclusion from the federal gift tax.

Web Keywords: minors

AB*

ADVANCE if contain a specific compliance requirement for insurers.

LILS #22 Minors Contractual Obligations

MONEY LAUNDERING

Background:Money Laundering is a specific type of criminal activity. Legislation addressing money laundering will use the words "money laundering" in the text. Money laundering is the action of taking proceeds derived from illicit activity and utilizing legitimate financial channels to conceal the criminal origin of such proceeds.An example: $10,000.00 in cash obtained through the sale of cocaine is used to purchase a fixed premium deferred annuity (from a life insurance company willing to accept cash, as opposed to a check drawn on a depository institution). Such an annuity is issued to the purchaser. The purchaser then exercises rights under the free look provision of the annuity to cancel/rescind the annuity contract. The life insurer sends a check to the purchaser for $10,000.00. The laundering is complete: the dirty cocaine money is laundered into clean money as a life insurance company check which the launderer then takes to a bank and cashes. Copies of the bill should be sent to issue expert to determine priority designation.

Position:Monitor bills related to money laundering as “AB".

Web Keywords: anti-money laundering, fraud, money laundering

AB

MULTIPLE EMPLOYER TRUSTSGroup Life InsuranceHealth Insurance

Position:Monitor to see if it affects insured plans. METs were organized to overcome the restrictions on the availability of group insurance in some states. May be sponsored by insurers or by independent administrators. May be insured or uninsured. Trustee is usually the trust department of a bank. Watch for extraterritorial application. If bill affects insured plans, bulletin and advance law; otherwise, include in adjournment bulletin only.

Web Keywords:

B ADVANCE if bill affects insured plans.

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MUTUAL HOLDING COMPANIES

Position:Support capability of mutual insurers to form upstream holding companies.Monitor mutual holding company legislation. ACLI holds no position pro or con with respect to any particular state's MHC laws.

Compliance Notes:Mutual Holding Company (MHC) legislation permits mutual insurers to reorganize into mutual holding company form. The mutual insurer is converted to a stock insurance company that is initially owned 100% by the MHC. Capital can be raised by selling stock in the converted insurer or an intermediate holding company, but the MHC must at all times retain a minimum of 51% voting control of the stock insurer. Policyholder membership rights are transferred to the MHC, while their insurance policy contract rights become the obligation of the converted stock insurer. This concept should not be confused with a demutualization where a mutual insurer becomes a stock insurer owned entirely by shareholders.

Web Keywords: holding company,

B ADVANCE

Financial Regulation(Somers)

NAIC MODEL Position:Support bills that enact language which is substantially similar to adopted NAIC Model Acts.Monitor bills that enact language that deviates from adopted NAIC Model acts.

Web Keywords: corporate confidentiality, corporate governance, holding company, NAIC, NAIC model act, ORSA, principle based reserves, reinsurance, risk based capital requirements, standard nonforfeiture law, standard valuation law

B ADVANCE


OFFICERS AND DIRECTORS

Corporate Governance

Position:Monitor bills involving imposition of personal liability on officers and directors for duties performed on behalf of the corporation.

Web Keywords: corporate governance

B ADVANCE

OMNIBUS BILL Position:Monitor. Bills of this type may be a recodification, the entire legislative package for the Insurance Department, or a budget bill.

B* ADVANCE relevant parts

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OWN RISK AND SOLVENCY ASSESSMENT


Privacy: Information Practices

Background:The ORSA Model was developed by the NAIC Group Solvency Issues Working Group as a required assessment the insurer makes about the adequacy of the insurer's risk management, and of current and likely future solvency position - encompassing all reasonably foreseeable and relevant material risks. An insurer that is subject to the ORSA requirement will be expected to have a risk management framework, regularly assess the adequacy of that risk management framework and the insurer’s current prospective solvency position, internally document the process and results, and provide an annual high-level summary report to the lead state regulator.

Position:Support uniform adoption of the ORSA Model

Web Keywords: confidentiality, holding company, solvency

B ADVANCE

ISC Holding Company Act / ORSA


SR Liaison: Walters

PAID LEAVE

Disability Income Insurance

Disability Income Insurance: Group

Background:The Family and Medical Leave Act (FMLA), enacted in 1993, allows eligible employees to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. More recently, many states have begun introducing legislation creating state-administered paid family leave programs that would provide paid benefits to individuals who need to take time off work to care for a seriously ill family member (and some for the employee’s own illness). Other states have proposals requiring employers with a minimum number of employees to offer paid sick leave.

Position:Monitor bills that create family leave and paid sick leave benefits. Conditionally Oppose bills that may adversely affect an insurer’s ability to sell short-term disability products.

B ADVANCE

Disability Income Insurance Compliance Service

OGC Liaison: Clayburn

PENSIONS


Position: Monitor bills that allow the establishment of public employee pension plans, usually as a defined contribution plan or an annuity-type product.Also monitor bills authorizing changes to public pension plans that may potentially affect our members who underwrite or administer the plans.

Compliance Notes:Advance if impact to insurers is clarified, or if potential applicability remains as opposed to bills that specifically identify state agencies for administration of policy applications or of claims processes.

Web Keywords: pension, retirement, IRA

B

PENSIONS: AUTO-ENROLLMENT

Pensions

Position:Monitor: Bills that mandate auto enrollment of 401(k)s.

Web Keywords: retirement, pension, state employee pension plan, IRA

B

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PENSIONS: STATE RUN IRA Background: Legislation has been introduced in states which would establish

state-run IRAs for employees of private employers (and potentially 401(k) and other plans for interested employers). Generally, under the proposals, the state would compete directly with existing private providers of IRAs and retirement plans; and in some states the proposal goes so far as to mandate that employers provide access to the state-run IRAs, even if an employer already offers a plan to its employees.

This idea has been introduced in several states, and its proponents typically maintain that there is a lack of employee access to employment-based retirement plans because of the complexity and cost of such plans from both an employer and employee perspective. Proponents insist that state-run IRAs would result in administrative cost savings for employees as compared to private products.

The insurance industry disagrees with each contention. The substantial cost of matching contributions, lack of employer and employee interest, difficult economic conditions, and rising health care expenses are all examples of reasons why some employers currently do not offer a plan; moreover, there is no evidence that state-run IRAs or other plans can be provided more cheaply than what is currently available in the marketplace.

Position:Oppose proposals that seek to implement a mandatory, state run retirement plan.

Web Keywords: defined benefit plan, defined contribution plan, employee benefits, IRA, IRS, pension, retirement, retirement security, Roth IRA, state employee pension plan, state regulation

B ISC State-Supported Employer Pensions

SR Liaison: Mangan

POLICY FORM FILING

Background:If form has been sold without having been filed and/or approved, the policy is typically enforceable by policyowner or beneficiary and the insurer may be fined or have its license revoked.

Position:Monitor provisions relating tom policy forms must be filed with and/or approved by the Insurance Department in the state where the policy is sold, depending on the language of the pertinent statute.

Compliance Notes:Interstate compact provisions relate to the streamlining of policy form filing procedures, i.e., speed to market

Web Keywords: form filing, health insurance (if applicable to long term care and disability income); interstate compact, speed to market

B Annuities (Auerbach);

Disability Income (McGuffey);


Long-Term Care (McGuffey)

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http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=state%20regulation

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=state%20employee%20pension%20plan

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=state%20employee%20pension%20plan

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=Roth%20IRA

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=retirement%20security

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=retirement

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=pension

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=IRS

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=IRA

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=employee%20benefits

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=employee%20benefits

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=defined%20contribution%20plan

http://members.acli.com/Tools/Search/Pages/SearchResults.aspx?specific=true&searchby=keyword&keyword=defined%20benefit%20plan


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PRE-NEED FUNERAL CONTRACTS

Position:Monitor any proposal concerning pre-need funeral contracts. A contract to pay for a funeral, typically funded by a small face amount life insurance policy is sold either by funeral directors on behalf of insurers or directly by insurers. These policies frequently come under close scrutiny by regulators and consumer groups who sometimes perceive that the policies offer little value and are sold on a predatory basis by funeral directors during times of intense grief. This perception is of particular concern to direct response writers who sell most of the small face amount policies.

Web Keywords: pre-need contracts, small face amount policy.

B ADVANCE

PREMUIM FINANCING

Background:A receipt is given to the payer that stipulates the circumstances under which the money can be withdrawn and how premiums unearned at the time of the insured's death will be paid. Ordinarily, unearned premium is paid to the beneficiary, to the payer or to the payer’s estate.

Position:Monitor provisions allowing insurers to pay premiums in advance for a specified period of time. NOTE however, that oftentimes, premium finance statutes specifically exclude life and health insurance from their scope.

Web Keywords: premium financing

B ADVANCE if life/health not excluded.

PREMUIMS: REFUND (UNEARNED)

Position:Monitor any proposal concerning refund of unearned premiums. Most insurers allow premiums to be paid in advance for a specified period of time. A receipt is given to the payer that stipulates the circumstances under which the money can be withdrawn and how premiums unearned at the time of the insured's death will be paid. Ordinarily, unearned premium is paid to the beneficiary, to the payer or to the payer’s estate.

Web Keywords: premium charges


LILS #40 Refund: Unearned Premiums

PRIVACY: DISPOSAL

Position:Monitor: Proposals requiring the mandatory/specific disposal of documents/equipment containing private data.

Compliance Notes:

Web Keywords: breach of security, identity theft, financial privacy, financial privacy, internet security, privacy

B Privacy (Wolf);

ISC Security Breach / Cybersecurity

SR Liaison: Pruitt

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PRIVACY: ENCRYPTION

Position:Monitor: Proposals requiring encryption of privacy data.

Compliance Notes:

Web Keywords: breach of security, identity theft, financial privacy, internet security, privacy

B Privacy (Wolf);


SR Liaison: Pruitt

PRIVACY: FINANCIAL INFORMATION

Position:Support strongly the privacy provisions set forth in Title V of the federal Gramm-Leach-Bliley Act (GLBA) and the following NAIC Models: (1) The Insurance Information and Privacy Protection Model Act, (2) The Model Privacy of Consumer Financial and Health Information Regulation, and (3) The Model Standards for Safeguarding Customer Information. (The two latter Models provide the states guidance for insurers’ implementation of the confidentiality and security requirements of the GLBA). ACLI policy in support of the GLBA and the related NAIC models is reflected in the ACLI “Confidentiality and Security of Consumer Financial Information Legislative/Regulatory Principles of Support.”

Compliance Notes:This issue arises in connection with legislation and proposed regulations seeking to govern insurers’ and other financial institutions’ access, use, and sharing of consumers’ financial information. If information is available mention whether it follows the NAIC models.

Web Keywords: breach of security, data security, financial privacy, internet security, identity theft, privacy

B Privacy (Wolf);

LILS # 53 Privacy: Security Breach;

ISC Security Breach / Cybersecurity;

Risk Classification (McGuffey) underwriting issue

PRIVACY: IDENTITY THEFT

Position:Monitor proposals that would subject insurers or business entities generally to requirements, other than to develop/implement security programs or to provide security breach notices that are intended to protect consumer information against identity theft. Examples include proposals requiring encryption or disposal of customer information.


B Privacy (Wolf)

PRIVACY: INFORMATION PRACTICES

Position:Monitor privacy bills that may impact an insurer’s use of confidential information – for example, where confidential information might be info obtained from another state agency (ex. driver license info/criminal history record info, keeping certain records held by a state agency exempt from public records)

Web Keywords: privacy

B Privacy (Wolf)

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PRIVACY: MEDICAL INFORMATION

Position:Support the NAIC Insurance Information and Privacy Protection Model Act which establishes standards for the collection, use and disclosure of information, including medical information, gathered in connection with insurance transactions.

Support the health information privacy provisions of the NAIC Model Privacy of Consumer Financial and Health Information Regulation. In addition, ACLI supports the privacy provisions of the federal Fair Credit Reporting Act (FCRA) applicable to medical information. ACLI policy on the privacy of consumers’ medical information is set forth in the ACLI “Confidentiality of Medical Information Principles of Support.”

Oppose any proposal that would limit insurers’ ability to obtain, use, or share their existing or prospective customers’ health information, including, but not limited to their genetic information and prescription drug histories, as permitted under state laws tracking the two NAIC models cited above and the federal FCRA. (ACLI’s position on proposals seeking to limit use of prescription drug histories and other relevant risk factors for underwriting is addressed further under “Risk Classification: Generally” below.

Compliance Notes:This issue arises in connection with legislation and proposed regulations seeking to govern insurers’ and other financial institutions’ access, use, and sharing of consumers’ health information, including but not limited to genetic information and prescription drug histories.

Web Keywords: breach of security, data security, internet security, identity theft, medical information, medical privacy, privacy, social security numbers

B Privacy (Wolf)

PRIVACY: PRESCRIPTION DRUG HISTORY

Position:Monitor: Proposals that would limit the sharing/use of prescription drug history information.

Oppose: Any proposed prohibition on underwriting based on prescription drug histories obtained from any source, including companies that aggregate the histories based on information obtained from databases. Also, oppose any proposed prohibition of (or limitation on) underwriting based solely on prescription drug histories, including those obtained from companies that aggregate the histories based on information from databases.

Web Keywords: health information, privacy, underwriting

B Privacy (Wolf)

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PRIVACY:SECURITY/SECURITY BREACH NOTICE

SECURITY OF CUSTOMER INFORMATION:Position:Support the security requirements imposed under Title V of the federal Gramm-Leach-Bliley Act (GLBA) and the NAIC Standards for Safeguarding Customer Information Model Regulation, developed by the NAIC to provide states guidance for insurers’ implementation of the GLBA security requirements.

Compliance Notes:If information is available mention whether it follows the NAIC model.

SECURITY BREACH NOTICE REQUIREMENTS:Position:Support legislation that avoids needlessly alarming consumers by requiring notice only when there is a risk of identity theft, fraud or significant harm to consumers. In the past, the model “Breach of Personal Information Act,” developed by the American Legislative Exchange Council (ALEC), has been acceptable to member companies.

Compliance Notes:These proposals may require insurers or financial institutions generally to develop and implement procedures to protect the security of their customers’ personal information, and/or to provide notice to consumers and possibly to others when there is a breach in the security of customer information. If information is available mention whether it follows the ALEC model.


B Privacy (Wolf)

LILS # 53 Privacy: Security Breach;


SR Liaison: Pruitt

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PRIVACY:SOCIAL SECURITY NUMBERS

Position:Support strongly the privacy provisions of the GLBA and state laws tracking the two NAIC model regulations described above that provide the states guidance for insurers’ implementation of the GLBA’s confidentiality and security requirements. These laws and regulations provide broad privacy and security protection for all of consumers’ nonpublic personal information, including their SSN’s. Accordingly, ACLI’s initial posture with respect to any state proposal to limit insurers’ use of or information practices in connection with SSN’s should be that such limitation is not necessary given the host of consumer protections provided under existing law. However, for the last several years, the substantive provisions of California Civil Code Section 1798.85 have provided the basis for compromise acceptable to ACLI member companies. Since enactment of the California statute, some state SSN privacy bills have sought to impose restriction on faxing and emailing documents including SSN’s, an issue not addressed in the California statute. In these cases, exceptions tracking the California exceptions to the limits on mailing of SSN’s have been acceptable to member companies. Also, some more recent state SSN bills have sought to prohibit conditioning the provision of goods or services based on an individual’s providing his or her SSN.

Oppose such a prohibition unless it is modified to provide an exception for the performance of ordinary business functions as described in Title V of the GLBA.

Compliance Notes:This issue arises in connection with proposals that would limit insurers’ ability to obtain, use, or share individuals’ Social Security Numbers. ACLI member companies, like other financial institutions, use SSN’s in connection with the performance of essential insurance business functions. For example, life insurers use SSN’s: (i) in the underwriting process, to ensure they are obtaining the medical records of the right individual,; (ii) to comply with various regulatory and legal mandates; and (iii) to detect and deter fraud. If information is available mention whether it follows the NAIC models.

Web Keywords: breach of security, data security, financial privacy, internet security, identity theft, privacy, social security numbers

B Privacy (Wolf)

LILS #50 Privacy: SSNs

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PRIVACY: SPYWARE

SUB-TOPICBackground:Do-not-track legislation is being introduced that would impose limits on member companies’ ability to collect and use information that they collect over the internet. These would include those proposals with the right to opt out of collection or use of online information. Applies to the use of cookies. Generally applicable to any limits on member companies’ ability to access information on prospective or current insureds.

Position:Oppose any bill that jeopardizes our ability to collect, use, retain, and/or disclose personal information necessary to the performance of ordinary insurance functions. Insurers must be able to collect information for their use in underwriting. Information collected for the purposes of customized marketing is also very valuable and something to be preserved. Contact: Robbie Meyer.

Compliance Notes:

Web Keywords: privacy, spyware,

BPrivacy (Wolf)

PROBATE: INSURANCE PROCEEDS

Background:This amendment had the effect of bringing insurance proceeds within the augmented (i.e., probate) estate. If life insurance proceeds are brought within the scope of provisions currently only applicable to probate assets, potentially significant delays in payments to beneficiaries will result. To the extent that companies are uncertain of when and to whom life insurance proceeds can be paid, they will simply pay the benefit to the probate court and file an interpleader action.

Position:Support the Uniform Probate Code I (UPC-I), approved by the National Conference of Commissioners on Uniform State Laws and the American Bar Association in August 1969. Article II of UPC-I specifically exempts life insurance and annuity proceeds from the probate estate. In 1991, Article II was amended to delete the insurance exclusion.

Web Keywords: claims payment,

B ADVANCE only if insurance proceeds are not exempt or if it affects revocation of a designation to a former spouse

LILS #60 Divorce

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PRODUCER LICENSING

Producers: Appointments

Producers: Continuing Education

Producers: Sales Practices and Compensation

Producers: Termination

Background:Uniform guidance was established by the NAIC Producer Licensing Model Act and most states have adopted it. An effort commenced in 2005 to address state deviations from the PLMA, especially regarding Agent Appointments.

Position:Monitor any proposal concerning licensing of producers.Nearly all state statutes contain licensing provisions applicable to resident and nonresident agents and brokers. No person may act as an agent or broker in a jurisdiction without being licensed. No company may accept business from or compensate any agent or broker who does not hold a valid license. Licenses may be perpetual until revoked or subject to renewal at specified intervals. Licenses are terminated by death or termination of appointment by an insurer. Licenses may also be refused, revoked or suspended by an insurance commissioner under certain circumstances.

Compliance Notes:Include in summary provisions which include whether or not an agent needs to be licensed; what actions would prompt revocation/suspension of license; penalties; reinstatement requirements; how commissions are to be distributed.

Web Keywords: continuing education, producer appointment reform, producer compensation, producer licensing, producer regulation,

B Agents (Walkins);

Market Conduct (Auerbach):

LILS #03 Agent Fees;

LILS #05 Agent Temporary Licenses;

LILS #39 Agent Investigation;

ISC Producer Licensing (RETIRED)

PRODUCERS: APPOINTMENTS

Background:These complicated requirements distinguish agents from brokers at great cost to insurers and consumers. Most states require an agent to obtain an insurer appointment before commencing agency activity but the main reason for such requirement is to generate revenue to the states rather than to provide consumer protection.

Position:Support one-time perpetual appointments.Oppose requirement of appointment renewals.

Web Keywords: agent licensing, broker-dealer, producer licensing, producer regulation

B Agents (Somers)

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PRODUCERS: COMPENSATION

Background:In 2016, Massachusetts became the first state to attempt to address gender-based pay disparities through legislation that prohibits employers from enquiring about prospective employee's salary histories. Since then, nearly 30 similar pieces of legislation have been introduced in states and cities around the country. While these bills would obviously affect the insurance industry in its role as an employer, there is an identified potential for them to negatively affect insurers' relationships with their insurance producers and sales managers.

A principal area of concern is whether these bills will prevent insurers from paying a training allowance subsidy (TAS) to inexperienced insurance producers. The TAS is key in allowing inexperienced producers to make some income while building up a book of business.

These bills could also affect insurers to the extent that they seek to bring experienced producers and sales managers into their sales distribution systems. In that case, it’s in an insurer's best interest to make sure that an experienced producer, as well as a sales manager, is or was actually an effective sales person and/or manager. If insurers are barred from asking about past income, it will be more difficult to determine the attractiveness of any candidate. The bills may also affect the ability of insurers to comply with internal policies governing the ability to enter into additional expense agreements with high-performing new producers.

Position:Support bills that allow employers to seek salary history information after a conditional offer of employment has been made. Oppose bills that require life insurers to disclose commission rates and other proprietary compensation information in a job posting and include independent contractors in the scope of any pay equity law.

Compliance Notes:

Web Keywords: agent licensing, producer licensing, producer regulation

B Agents (Somers)

LILS #68 Agent Commission Assignment

PRODUCERS: CONTINUING EDUCATION

Position:Monitor any proposal concerning annual continuing education requirements upon agents and brokers. The requirements are designed to improve the competency of producers. Failure to fulfill the requirements results in nonrenewal of the agent's or broker's license. ACLI follows NAIFA lead in legislative advocacy in this area.Support the continuing (CE) provisions of the NAIC Uniform Producer Licensing Standards, adopted in 2001 following adoption of the NAIC Producer Licensing Model Act.

Web Keywords: continuing education, producer licensing.

B Agents (Somers);

LILS #04 Agent Education

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PRODUCERS: GENERALLY

Position:Monitor any proposals concerning other producer issues not covered by a keyword.

Web Keywords: producer licensing, producer regulation

B Agents (Somers);

ISC Producer Licensing (RETIRED)

PRODUCERS: SALES PRACTICES

Background:On December 29, 2004, the NAIC adopted new language that amends the NAIC Producer Licensing Model Act to implement disclosure requirements that ensures that consumers are provided the necessary information to understand the manner in which brokers are compensated for the sale of insurance products. The NAIC deferred action on the following issues until no later than March 2005: consideration of fiduciary duty; consideration of all quotes received by a broker; and disclosure of producer-owned reinsurance arrangements.

Insurance bid-rigging revelations by NY Attorney General Spitzer in 2004 inaugurated sweeping re-evaluation of broker regulation issues, spilling into agent-broker definitions, producer compensation disclosure, rebates, and broker fiduciary duty.

Position:Support amendments to Producer Licensing Model Act adopted by the NAIC on December 29, 2004.Support legislation (a) if introduced in any jurisdiction; or (b) as an alternative to legislation the industry finds objectionable.

Compliance Notes:Include in summary how enacted or amended provisions compare to model act.

Web Keywords: agent licensing, producer licensing, producer regulation

B Agents (Somers)

LILS #68 Agent Commission Assignment

PRODUCERS: SENIOR DESIGNATIONS

Background:On September 24, 2008, the NAIC adopted the Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities. As adopted, the model prohibits the use of certain senior-specific certifications and professional designations in advising or servicing seniors in the purchase of life insurance and annuities.

Position:Support: The introduction of the model regulation in any jurisdiction.

Compliance Notes:Include in summary how enacted or amended provisions compare to model act.

Web Keywords:agent licensing, annuity, life insurance, producer licensing, producer regulation; senior-specific certifications

B LILS#42 Senior-Specific Certifications

ISC Annuity Disclosure & Suitability & Senior-Specific Certifications

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PRODUCERS: TERMINATION

Background:Insurers are typically required to provide reasons for agent termination, which can expose them to possible liability for defamation, wrongful termination and invasion of privacy.

Position:Support Section 15 of the NAIC Producer Licensing Model Act (PLMA) which provides uniform state requirements for termination disclosure, immunity and confidentiality.

Web Keywords: producer licensing

B Agents (Somers);

LILS # 02 Agent Termination

PUBLIC EMPLOYEES: DEFINED CONTRIBUTION PLANS

Position:Monitor bills allowing a public employer to establish a defined contribution pension plan, usually an optional plan, for its employees or make changes to an existing defined contribution plan. This is not to be confused with public employee pension bills that make changes to the benefits or eligibility for existing defined benefit pension plans.

Web Keywords: defined contribution plan, pension, retirement, state employee pension plan, state investment laws

B ADVANCE

PUBLIC EMPLOYEES: PENSIONSAnnuities: Group

Position:Monitor bills authorizing public employee pensions or changes to existing municipal/state pension systems that affect our members who write these plans which are usually funded through a group annuity-type product.

Web Keywords: pension

B ADVANCE

ISC State-Sponsored Employer Pensions Plans: Legislation & Studies

PUNITIVE DAMAGESTort Reform

Position:The awarding of very large punitive damage awards, attributable largely to eroding and confusing standards of tort/liability and societal expectations of full compensation, regardless of fault.

Web Keywords: tort reform

B ADVANCE

Disability Income Insurance (McGuffey)if applicable.

Life Insurance Contracts (Auerbach) if applicable.

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RATE REGULATION: LIFE INSURANCE

Position:Oppose efforts to regulate the pricing of life insurance products. The life insurance business is highly competitive. The price of life insurance has decreased steadily due to increased longevity and higher rates of return on investments. Life insurance is also fundamentally different from other lines of insurance because it is a long-term contract so premiums are not based on current claims experience, investment returns and expenses. Rate regulation would be extremely difficult, if not impossible, for a state Insurance Department to administer.

Web Keywords: life insurance

B Life Insurance Contracts (Auerbach) – Individual and Group Life

READABILITY Position:Support the enactment of the NAIC Life and Health Insurance Policy Language Simplification Model Act. Requires policies to be written in simplified language and to pass a "Flesch reading ease test" to facilitate ease of reading by insureds.

Compliance Notes:If information is available reference whether it follows or deviates from the NAIC Model.

Web Keywords: form filing, life insurance, readability

B Life Insurance Contracts (Auerbach) – Individual and Group Life

REDOMESTICATION Position:Support the NAIC Model Redomestication Bill, which permits companies to efficiently change their state of domicile to another state with prior regulatory approval. On the federal level, there are several financial restructuring bills that include redomestication provisions, which would allow mutual companies to redomesticate to a state which permits formation of mutual holding companies. If enacted, these laws would preempt actions that frustrate redomestication for such purpose. The ACLI Board has approved federal statutory language that would facilitate redomestication by mutual companies.

Compliance Notes:If information is available reference whether it follows or deviates from the NAIC Model.

Web Keywords: insurance department, life insurance, mutual

B ADVANCE

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REHABILITATION AND LIQUIDATIONGuaranty Associations

NAIC INSURER RECEIVERSHIP MODEL ACT (IRMA)Background:IRMA contains several provisions that are favorable to the life insurance industry, such as those relating to early access and reinsurance. However, it also contains numerous other provisions that could harm insurers, guaranty associations and policyholders, including those relating to intervention, subject matter jurisdiction, burden of proof, immunity and treatment of guaranty association expenses.Position:Monitor bills that relate to the rehabilitation and liquidation of insurance companies.Monitor amendments to IRMA. Adopted December 2005, IRMA is intended to replace the Insurers Rehabilitation and Liquidation Model Act, the current NAIC model governing receiverships. NAIC is considering making the IRMA, or portions therein, a state accreditation standard.

UNIFORM RECEIVERSHIP LAWBackground:ACLI adopted Board policy in November 1999 in support of legislation based on the Uniform Receivership Law (URL). and provides a more balanced approach of clarifying the authority and responsibilities of guaranty associations, receivers and reinsurers in the event of an insurance insolvency.Position:Support legislation based on Uniform Receivership Law (URL) adopted by Interstate Compact Commission in September 1998.

NAIC REHABILITATION AND LIQUIDATION MODEL ACTPosition:Support Model.Monitor and pay particular attention to any changes proposed to the following provisions: priority of distribution; confidentiality; expansion of grounds for rehabilitation or liquidation; reinsurer's liability; and setoff.Oppose any erosion of the right of setoff.

NAIC ADMINISTRATIVE SUPERVISION MODEL ACTPosition:Support Model, which outlines when an insurer is subject to administrative supervision; what proceeding and records are considered confidential; and acts prohibited by insurers during supervision. Confidentiality of records should be maintained.

NAIC MODEL REGULATION TO DEFINE STANDARDS AND COMMISSIONER’S AUTHORITY FOR COMPANIES DEEMED TO BE IN HAZARDOUS FINANCIAL CONDITIONPosition:Support Model which sets standards Commissioners may use to identify insurers found to be in such condition as to render the continuance of their business hazardous.Web Keywords: guaranty association, hazardous financial condition, IRMA, receivership, rehabilitation and liquidation


Reinsurance (Wolf)

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REINSURANCE ASSUMPTION REINSURANCEBackground:Agreement that transfers insurance obligations and/or risks of existing or in-force contracts of insurance from one insurer (the ceding insurer) to another insurer (the assuming insurer). Transfer is intended to affect a novation of contract so that the assuming insurer becomes directly liable to the policyholder(s). Provisions that relate to the notification of assumption reinsurance to policyholders is within the scope of market conduct.Position:Support NAIC Assumption Reinsurance Model Act except for Section 5.B which permits policyholders to reject the transfer of their policies within 25 months after receiving notice of the transfer. The ACLI would like to see the time period during which the rejection can occur reduced from 25 to 12 months.

CREDIT FOR REINSURANCEBackground:Recognition on a ceding company's financial statement of credit for unearned premium and loss reserves ceded to an assuming insurer is a principal regulatory tool applicable to reinsurance.Position:Support NAIC Model Law on Credit for Reinsurance #785 and the NAIC Credit for Reinsurance Model Regulation #786, both of which are required for accreditation by the NAIC.

LIFE AND HEALTH REINSURANCE AGREEMENTBackground:Model Regulation is designed to prevent a ceding insurer from entering into a reinsurance agreement for the principal purpose of producing significant surplus aid for itself, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured.Position:Support NAIC Life and Health Reinsurance Agreements Model Regulation #791, which is required for accreditation by the NAIC as of January 1, 1996.

REINSURANCE INTERMEDIARYBackground:Model Act provides for the regulation and licensing of persons who negotiate or place reinsurance cessions or retrocessions on behalf of a ceding insurer, and persons who bind or manage all or part of the assumed reinsurance business of a reinsurePosition:Support NAIC Reinsurance Intermediary Model Act #790 because it is required for accreditation by the NAIC.

Web Keywords: reinsurance

B Reinsurance (Wolf);

Market Conduct (Auerbach);

LILS # 56 Reinsurance;

SR Liaison: Bryant

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REPLACEMENT (LIFE INSURANCE AND ANNUITES)

Background:Replacement laws and rules require certain procedures to be followed when a policy or contract is sold and an existing policy or contract is replaced. A policy is “replaced” when any of its value is used to purchase a new policy or contract. Replacement rules require a variety of notices, disclosures, and record keeping.The NAIC Life Insurance and Annuities Replacement Model Regulation details required provisions. Some states have adopted the provisions by statute as opposed to regulation.

Position:Monitor any bill that adopts or amends the NAIC model or other statute related to replacement.Support amendments to replacement laws that exclude conversion privilege among corporate affiliates from the replacement requirements.

Compliance Notes:Include in summary how enacted or amended provision compares with NAIC models; also add if provisions relate to notices, disclosures, or record keeping.


LILS #35 Replacement

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RETAINED ASSET ACCOUNTS

Life Insurance: Settlement Options

Background:Retained asset accounts have existed since 1982. They were developed in response to requests from policyholders who wanted their life insurer to provide a service that would allow them to delay major financial decisions during an emotional and vulnerable time. They provide settlement of life insurance proceeds through delivery of a "checkbook" to the beneficiary. The beneficiary can write one check to access the entire proceeds, or can write checks for lesser amounts until the account is depleted. Many insurers provide beneficiaries with this service for both group and individual life insurance policies.

In 1994, the National Association of Insurance Commissioners (NAIC) developed and approved a sample bulletin for the treatment of retained asset accounts. The sample bulletin set forth insurance regulators' expectations for such accounts, including disclosure to consumers of the important features of the account, tax implications and interest rate payments. The bulletin was updated by the NAIC in 2010.The National Conference of Insurance Legislators (NCOIL) offered the Beneficiaries' Bill of Rights about the same time.

Position:Support any bill which includes the disclosure provisions of the NAIC Model Bulletin.Monitor any bill which includes the disclosure provisions of the NCOIL Beneficiaries' Bill of Rights.Oppose any legislation that prohibits the use of a retained asset account as the default settlement option.

Compliance Notes:Include in summary whether provisions follow NAIC model bulletin or NCOIL model. Specifically note if there is a prohibition against use of RAA as a default.

Web Keywords: retained asset accounts, settlement options, supplementary contract



LILS#70 Retained Asset Accounts

REVERSE MORTGAGES

Background:Federal law places restrictions on the marketing and sale of federally-backed reverse mortgages in conjunction with other financial services products. State laws may similarly seek to restrict or prohibit the marketing and sale of insurance products (typically annuities) in conjunction with state-regulated reverse mortgages.

Position:Support laws that prohibit requiring the purchase of an insurance product as a condition of obtaining a mortgage.Oppose all other restrictions on cross-marketing.

Compliance Notes:Include how provisions relate to position of support, i.e., prohibiting purchase of insurance as condition for a mortgage.

Web Keywords: annuity, life insurance, long-term care insurance (depending on insurance product prohibited as a requirement for a mortgage)

B ADVANCE

SR Liaison: Waiters

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RISK-BASED CAPITAL


Investments: Generally

Background:Risk-Based capital provides a means of identifying weakly capitalized companies and stipulates various levels of regulatory action.

Position:Support NAIC Model Act on Risk-Based Capital and preservation of its confidentiality provisions.

Compliance Notes:Include in summary how enacted or amended provisions relate to NAIC model.

Web Keywords: confidentiality, risk-based capital requirements

B Financial Regulation (Somers)


RISK CLASSIFICATION: AIDS

Aids Testing: Non-Blood Tests

Aids: Generally

Background:Includes any bill that governs insurers right to require or to underwrite on the basis of certain medical tests that diagnose HIV infection.

Position:Oppose proposals that would prohibit insurers from requiring proposed insureds to undergo tests to determine HIV status or from underwriting on the basis of the results of such tests. ACLI defends insurers' rights to use the results of such tests in the same way that insurers use other medical information.Support the NAIC Medical/Lifestyle Questions and Underwriting Guidelines that prohibit underwriting based on sexual orientation and prohibit any adverse underwriting action on the basis of a positive AIDS related test unless an established protocol is used.

Web Keywords:AIDS, underwriting, risk classification




ISC Risk Classification

RISK CLASSIFICATION: AUTISM


Position:Monitor any proposal relating to underwriting based on autism.

Web Keywords: risk classification


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RISK CLASSIFICATION: DOMESTIC VIOLENCE


Position:Support state proposals tracking the relevant NAIC model on Unfair Discrimination Against Subjects of Abuse, all of which prohibit underwriting based on an individual’s status as a victim of abuse.Oppose domestic violence proposals that prohibit, limit, or may jeopardize the ability to underwrite based on a medical condition that resulted (or may have resulted) from domestic abuse.

Compliance Notes:Any laws or regs that relate to whether or not domestic violence is allowed as a risk factor is advanced.



LILS #1 Domestic Violence

RISK CLASSIFICATION: GENERALLY

AIDS Testing and Privacy

Autism – only if impact on LTC/DI is clear

Biometrics

Credit Scores/ Information

Death With Dignity

Domestic Violence

Gender

Gender Identity

Genetic Testing and Privacy

Prescription Drug Histories

Travel Underwriting

Position:Support proposals that track the NAIC Model Unfair Trade Practices Act (UTPA).

Oppose generally, in absence of a special policy or specially developed response that provides otherwise, any proposal that would prohibit, limit, or jeopardize member companies’ ability to underwrite as permitted under the UTPA or otherwise limit member companies’ ability to underwrite on the basis of information relevant to a proposed insured’s risk of dying prematurely, becoming disabled, or requiring long term care insurance; including, but not limited to, proposals to govern underwriting based on autism, credit scores/information, prescription drug history, gender or sex.

Where there is specific policy or specially developed response, support, oppose, or monitor as dictated by such. ACLI has specific policy or specially developed response applicable to proposals relating to AIDS/HIV status, domestic abuse/violence, genetic information/test results, and past and future travel.



LILS # 52 Exclusions for Coverage;

LILS #61 Domestic Violence

ISC Risk Classification

ISC Travel Underwriting

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RISK CLASSIFICATION: GENETIC INFORMATION/TESTING


Position:Monitor state proposals that would prohibit or limit underwriting based on genetic tests or information.Support enactment of state legislation which would limit underwriting for life, disability income, or long-term care insurance provided:--(i) traditional medical underwriting on the basis of traditional medical information and medical tests is not jeopardized;--(ii) continued access to and underwriting on the basis of all medical information (including genetic information and the results of genetic tests) which exists at the time the individual applies for coverage is allowed; and--(iii) even if limitations placed on life insurers’ right to require individuals to undergo genetic tests, the right to require routine medical tests in use today and any other tests, including genetic tests, once they become generally accepted in clinical practice is preserved.Support also a requirement that there be a relationship between medical information that is the basis for an underwriting action and the cost of insurance.

Compliance Notes:Include in summary how provisions relate to ACLI positions on genetic testing; also, if provisions were enacted or amended in compliance or in reaction to the federal Genetic Testing Information Act (GINA).

Web Keywords: genetic testing, GINA (if applicable)


LILS# 6 Genetic Testing

SR Liaison: Gerni

RISK CLASSIFICATION: PRESCRIPTION DRUG HISTORY


Position:Oppose proposals relating to prescription drug histories, that would limit life, disability income or long-term care insurers’ right to obtain, use, or underwrite on the basis of information relating to existing or prospective customers’ prescription drug histories.

Monitor proposals relating to prescription drug histories that do not impact insurers' ability to obtain, use, or underwrite on the basis of prescription drug histories.



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RISK CLASSIFICATION: TRAVEL


Background:ACLI has not formally adopted a special policy applicable to state policies limiting or prohibiting underwriting based on past travel or future travel plans.ACLI indicated to NAIC that it will not oppose state proposals reflected in the 2008 amendments to the UTPA.Member companies have also directed ACLI not to oppose state proposals tracking either the Connecticut or the Massachusetts statutes.Accordingly, ACLI does not oppose state proposals tracking the NAIC travel underwriting guideline or the Connecticut or Massachusetts travel underwriting statutes.ACLI’s response to a state travel underwriting proposal that does not track any of these approaches should be considered on a case-by-case basis.

Position:Monitor proposals related to travel underwriting and consider position on a case by case basis.

Compliance Notes:Any laws or regs that relate to whether or not travel is allowed as a risk factor is advanced.

Web Keywords: travel underwriting


ISC Travel Underwriting

RISK CLASSIFICATION: UNISEX


Position:Monitor proposals relating to use of gender or sex in underwriting.

Web Keywords: risk classification, unisex


SECURITIES Position:Oppose amendments to the Uniform Securities Act that would also give state securities commissioners jurisdiction over variable life insurance and variable annuities. These products are already subject to three layers of state and federal regulation. The addition of state securities jurisdiction would impose significant, unnecessary regulatory burdens on life insurers and their distributors. There has been no demonstration that these products are in need of an additional regulator.Support (1) maintaining the exclusion from the definition of "security" for all insurance policies, endowment contracts and annuities, (2) maintaining the definition of "investment adviser" as it appears in the Uniform Securities Act of 1956, and (3) reviewing broker/dealer regulatory and legislative initiatives to ensure that insurers and their affiliates are regulated fairly.

Web Keywords: securities, securities laws, variable contracts, variable products.

B Variable Contracts (Lewis)

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SELF-CRITICAL ANALYSIS PRIVILEGE

Position:Monitor any proposal that would establish an evidentiary privilege for compliance reviews of life and health insurers.

Web Keywords: self-critical analysis.

B LILS # 49 Self-Critical Analysis (RETIRED)

SENIOR INVESTOR PROTECTION

Fraud: Insurance

Background: Senior financial protection laws have been adopted in a number of states and they generally involve licensed security brokers and dealers. Because most states exempt variable life insurance and variable annuities from the state definition of a “security,” these bills do not impact member company products or producers. Financial abuse of seniors will receive more media and regulatory attention as our population ages. Life insurers are also concerned with the financial protection of the elderly and take steps each day to safeguard the integrity of customer funds invested or held on their behalf.

While the legislation enacted to date has not applied to life insurance products and life insurance producers, ACLI has developed a policy of senior protection and supports the voluntary reporting of suspected senior fraud.

Position:Monitor any proposal that would require reporting suspected abuse to regulatory agencies and/or trusted third-parties.

Web Keywords: cash value, consumer protection, fraud, senior designations, sales to seniors, suspicious activity reporting

BISC Senior Investor Protection

ADVANCE, if insurers are impacted

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SOCIAL MEDIA

Privacy: Information Practices

Background: Online social media networks and social media continue to grow, along with mobile communications devices and applications. Public policy makers are responding to privacy concerns that employer access to and monitoring of employee social media accounts is resulting in improper intrusions into personal communications. In addition to the treatment of existing employees, some employers currently access prospective employee social media accounts as part of a pre-employment background check. In both instances, employers may demand that individuals release passwords and other account information to facilitate access. This practice has received widespread criticism from privacy and civil rights advocates.

State legislatures are considering bills that prohibit employers and prospective employers from requiring that passwords be revealed for the purpose of accessing personal social media accounts. The stated purpose of the bills is to protect personal information and communications of employees and prospective employees.

However, a significant issue is that many individuals today use social media accounts and personal devices for both business and personal purposes.

Position:Oppose any legislation that is designed to limit an employer’s access to social media accounts that does not provide exceptions that permit access to such accounts to meet legal and regulatory requirements and contain exceptions when the accounts and devices are used for business purposes.

These bills should contain the following provisions:

Definition of “personal account”“Personal account” means an account, service or profile on a social networking website that is used by a current or prospective employee exclusively for personal communications unrelated to any business purposes of the employer. This definition shall not apply to any account, service or profile created, maintained, used or accessed by a current or prospective employee for business purposes of the employer or to engage in business related communications.

Exemption for legal requirements:Nothing in this act shall be construed to prevent an employer from complying with the requirements of State or federal statutes, rules or regulations, case law or rules of self-regulatory organizations.

Business UseNothing in this act shall prevent an employer from implementing and enforcing a policy pertaining to the use of employer issued electronic communications device or to the use of an employee-owned electronic communications device that will be used for business purposes.

Web Keywords: privacy

B

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STOP LOSS Background: Beginning in January 2018, ACLI began tracking supplemental products including absence management, accidental death and disability, dental, fixed-dollar indemnity, hospital reimbursement/confinement, stop loss and vision.

Position:


B

STRUCTURED SETTLEMENTS

Annuities: Individual

Position:Monitor bills that address the “factoring” of Structured Settlement Annuities. “Factoring” occurs when the receipt of proceeds from a Structured Settlement annuity sells or assigns them away to a third party. All bills dealing with “Factoring” are of interest.

Web Keywords: structured settlements

B

SUITABILITY Background:Several states have enacted laws or promulgated regulations to require insurers and their agents to comply with suitability standards for determining the suitability of non-variable annuity products.

Position:Support adoption of the NAIC Senior Protection in Annuity Transactions Model Regulation: The NAIC promulgated the Model Regulation in response to concerns about unsuitable annuity sales to individuals over age 65. ACLI shares these concerns about reported inappropriate sales.Support adoption of the NAIC Annuity Disclosure Model Regulation to improve the information provided to annuity purchasers of all ages.Monitor suitability standards based upon the NASD suitability standard applicable to the sale of securities including variable life insurance and variable annuity products.Monitor other proposals applicable to suitable sales. It is important to determine whether these proposals apply to variable products as well as to fixed products and, if so, whether they conflict with existing NASD rules.

Compliance Notes:Include in summary provisions relating to general insurance suitability.

Web Keywords: suitability, fixed annuity, variable annuity, variable contracts, variable products.


ISC Annuity Disclosure & Suitability & Senior-Specific Certifications

SUPPLEMENTAL: GENERALLY


Position:


B

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TAXATION: COMBINED UNITARY REPORTING

Position:Actively Oppose bills which would amend the state corporate income tax law to install combined unitary tax reporting which would combine non-insurers with insurers (we have no objection to combining insurers with other insurers).

Compliance Notes:Include in summary provisions which provide an exclusion for insurers.

Web Keywords: corporate tax, state taxes.

B Premium Tax (Witt);

ISC State Taxation;

SR Liaison: Hall

TAXATION: CORPORATE NET INCOME

Position:Monitor proposal concerning the “regular” income tax imposed on non-insurance corporations. Noteworthy because; 1) in some states insurers are subject to the corporate income tax; 2) some insurers have non-insurance affiliates and subsidiaries that are subject to the tax and 3) with Financial Services Modernization insurers may become more widely subject to this tax.

Compliance Notes:Send advance law to Premium Tax if insurers pay income tax in the state.

Web Keywords: corporate tax, state taxes.

B Premium Tax (Witt)

ISC State Taxation;

SR Liaison: Hall

TAXATION: FEDERAL CONFORMITY

Background:Changes to the Federal Internal Revenue Code often need to be incorporated into different state statutes. Most states use the same definition of adjusted gross income as the current Internal Revenue Code; however, there are approximately 19 states that do not.

Position:Monitor bills that are attempting to conform state tax law to the current federal IRC.

Web Keywords: state taxes

B ADVANCE

TAXATION: GENERALLY

Position:Monitor any other bills with basic tax information on areas of interest to membership that do not have a keyword on point in LTS.

Compliance Notes:Advance only if insurance related.

Web Keywords: corporate tax, state taxes

B SR Liaison: Hall

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TAXATION: INDIVIDUAL INCOME

Position:Oppose new taxes on life insurance products. Issue is whether life insurance products (life insurance, annuities, long-term care, nonqualified deferred compensation, third-party sick pay, pension, retirement income, IRAs) are subject to tax treatment different than under federal law. The issues involve taxation of distributions, earnings as well as deductions for premiums and exclusions for a portion of the income.

Compliance Notes:Advance if in explanation context.


B ISC State Taxation;

SR Liaison: Hall

TAXATION: INFORMATION REPORTING

Background:Reporting of taxes withheld from pension, life insurance, long-term care, non-qualified deferred compensation, IRA’s, annuity, disability and sick pay income payment arrangements. Can also include new electronic reporting requirements on insurers.

Position:Oppose new state requirements that differ from federal rules.Monitor new requirements that track federal rules.

Compliance Notes:Include in summary provisions dealing with time frame for compliance with new rules.

Web Keywords: state taxes, withholding information reporting

B ADVANCE

TAXATION: INHERITANCE TAXESTaxation: Withholding and Reporting

Position:Monitor bills dealing with reform of inheritance, estate, or gift taxes, or with insurer’s obligation to withhold for these taxes or report of the payment of benefits.Neutral is assigned to bills that would completely repeal a state’s inheritance or estate tax.Oppose new reporting or withholding requirements on life insurers.

Web Keywords: estate taxes, withholding information reporting

B ADVANCE

TAXATION: INTANGIBLE TAXES

Position:Oppose attempts to include insurance as an intangible for tax purposes.


B ADVANCE

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TAXATION: MUNICIPAL TAXES

Position:Monitor any proposals relating to assessment of a tax or fee at the municipal level. Found in states without an "in lieu of" clause exempting insurance from all fees and taxes except premium taxes and fees imposed by the Insurance Department.Oppose any attempt to increase tax rate.

Web Keywords: premium tax

B Premium Tax (Witt)

ISC State Taxation;

SR Liaison: Hall

TAXATION: PREMUIM TAXES

Position:Oppose any attempt to increase tax rate, broaden base, reduce or eliminate tax credits.Support any attempt to reduce the tax burden on member companies.Monitor any proposals related to relevant tax credits, assessment, payment, refund, or administration of the premium tax.

Compliance Notes:Include in summary any change to tax rate, any change to timing of payments, any creation or repeal of credits.

Web Keywords: annuity tax, premium tax, state taxes, statute of limitations, tax credit.

B Premium Tax (Witt);

LILS # 37 Premium Tax Statute of Limitations

LILS # 67 Guaranty Fund Tax Offsets;

ISC State Taxation;

SR Liaison: Hall

TAXATION: SALES TAX

Position:Oppose any attempt to impose sales tax on life insurance or life insurance agent commissions. Life insurance is not subject to sales tax in any state. The sales activities performed for life insurance companies by life insurance agents are not subject to sales tax in any state.

Web Keywords: sales tax, state taxes

B ADVANCE

ISC State Taxation;

SR Liaison: Hall

TAXATION: WITHHOLDING AND REPORTING

Taxation: Inheritance Taxes

Background:In certain cases, insurers are obligated to withhold individual state income tax from many individual types of payments (e.g., pensions, annuities, sick pay, disability, etc.). Many states have exclusions from when withholding is required, even if reporting is required. Also, the state definitions are often broad or vague (i.e., no withholding on retirement income up to a set $ amount). These state laws change frequently. In some states, there are also withholding and reporting laws for individual municipalities. Also involves deposit of those amounts.

Position:Oppose new state requirements that differ from federal rules.Monitor new state laws that mirror federal rules giving sufficient time for compliance (i.e. 12 months or more).

Web Keywords: state taxes, withholding information reporting

B ADVANCE

State Withholding (Witt)

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TERRORISM: GENERALLY

Background:As a result of the tragic events of September 11, 2001, many states introduced legislation addressing acts of terrorism.

Position:Monitor terrorism laws if (1) requirements are not overly burdensome to company operations; (2) it provides “good faith” for compliance/noncompliance; (3) it does not impose onerous civil penalties or allows civil actions; and (4) provisions are based on the USA Patriot Act. If otherwise, a position would be determined on a case-by-case basis.

Compliance Notes:Bills of interest that do not have policy exclusions include, but are not limited to: legislation regarding money laundering; victims’ compensation funds; use of affidavits in lieu of death certificates; missing policy determination procedures; terrorism loss accounting, financial effects and solvency reviews; modification of benefits or terms regarding disability, long-term care, worker’s compensation, unemployment insurance, and retirement funds; claim practices; and premium payment deadline extensions or modifications.

Web Keywords: Terrorism Risk Insurance Act, reinsurance, risk classification.


Reinsurance (Wolf)


TERRORISM: POLICY EXCLUSIONS

Insurance Contracts: Generally

Policy Form Filing

Background:If their policies cover loss or disability attributable to terrorism, primary insurers may be penalized if they are unable to reinsure their exposure and cannot amend those policies to limit or exclude terrorism losses. Exclusions in general should be defended as traditional risk management techniques. Insurers use exclusions carefully lest they lose market share to others willing to assume the risk.

Position:Monitor terrorism exclusions--which are one way for an insurer to manage risk. Terrorism exclusion provisions were introduced in reaction to (1) the events of the 9/11 terrorist attacks; and (2) the decision by reinsurers providing catastrophic coverage to limit or eliminate terrorism risk for the policies being renewed or underwritten.


Reinsurance (Wolf)


THIRD PARTY ADMINISTRATORS

Position:Support NAIC Third Party Administrator Statute which imposes requirements upon anyone who directly or indirectly solicits, effects, underwrites or collects premium for, or who settles claims in connection with, life or health insurance coverage or annuities.

Compliance Notes:Third-party administrators are covered within a limited basis in the Reinsurance Service.

Web Keywords: third party administrator

B Reinsurance (Wolf)limited coverage

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TORT REFORM

Punitive Damages

TORT REFORM: GENERALLYPosition:Support all proposed legislation that brings fairness to the civil justice system, if the legislation would benefit the life and health insurance industry directly or indirectly, (e.g., class action reforms, civil procedure reforms)

TORT REFORM: PROTECTIVE ORDERSBackground: Legislation introduced may amend the Code of Civil Procedure, Evidence Code, or if specifically targeting insurers, the Insurance Code, or even to statutory contract law (though the later would be an odd approach). Protective orders are entered into by parties in litigation or in an administrative proceeding. In essence, protective orders are a type of contract governing discovery. A court or administrative law judge must approve a protective order, and the order itself becomes part of the public court record. Protective orders are used to put a protective cloak around specified produced discovery from becoming part of the public record in a court (or in an administrative proceeding). Thus, the specified produced discovery is “sealed”, is not part of the court public record, and cannot be accessed by anyone other than the litigants, and, the litigants agree the “sealed” produced discovery cannot be used in any other litigation.Position:Monitor restrictions or prohibitions on use of protective orders (sometimes called confidentiality agreements).Oppose any proposed legislation that weakens protective orders, proposes severe restrictions on use of protective orders, mandates onerous burdens before a court can approve the protective order, or affects in any way the status quo in state law for the entering into and approval of protective orders.

Tort Reform: Punitive Damages:Position:Monitor all proposed legislation that places a cap on punitive damages or raises the evidentiary standard of proof for such damages.

Tort Reform: Joint and Several Liability:Position:Monitor all legislation that modifies the doctrine of joint and several liability to apportion fault among parties fairly, typically includes a multi-tiered approach based on a percentage of fault.

Tort Reform: State Class Action Reform : Position:Monitor all legislation that brings fairness to the state class action lawsuits including staying discovery while a motion for summary judgment is pending and allowing an immediate appeal of class certification by the trial court.

Web Keywords: tort reform

B

B

B

B

B

ADVANCE if applicable to insurance-related litigation





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UNAUTHORIZED INSURERS

Position:Support the NAIC Unauthorized Insurers False Advertising Process Act, the NAIC Unauthorized Insurers Process Act and the NAIC Non-Admitted Insurance Model Act, all of which are designed to protect persons seeking insurance in a state by subjecting insurers not authorized to transact business in that state to the jurisdiction of the Insurance Commissioner and the courts.

Compliance Notes:If available reference whether it follows or deviates from the NAIC Models.

Web Keywords:

B Market Conduct (Auerbach) if covers advertising by unauthorized insurers, misrepresentation by unauthorized insurers, insurers/policies exempted from unauthorized insurers process act. Penalties.

UNAUTHORIZED PRACTICE OF LAW

Position:Monitor proposals concerning the outsourcing of legal document review, drafting, or analysis which may be defined as the unauthorized practice of law.

Web Keywords: company operations

B ADVANCE

UNFAIR TRADE PRACTICES: CLAIM SETTLEMENT

Position:Support the NAIC Model Unfair Claim Settlement Practices Act, which was adopted by the NAIC in 1972 as part of the Model Unfair Trade Practices Act. The Model requires insurers to promptly and thoroughly investigate claims and settle claims on which liability has become reasonably clear.

Compliance Notes:If available reference whether it follows or deviates from the NAIC Model.

Web Keywords: claim, unfair trade practices


LILS #44 Claims Communication

UNFAIR TRADE PRACTICES: GENERALLY

Position:Support the NAIC Model Unfair Trade Practices Act which defines and prohibits unfair trade practices, including defamation, unfair discrimination, rebating, unfair claim settlement practices and false advertising.

Compliance Notes:If available reference whether it follows or deviates from the NAIC Model.

Web Keywords: advertising, discrimination, unfair trade practices, market conduct, anti-rebating

B Market Conduct (Auerbach)also includes penalty provisions.

Risk Classification (McGuffey) if related to underwriting discrimination

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UNFAIR TRADE PRACTICES: PRIVATE RIGHT OF ACTION Unfair Trade Practices: Generally

Position:Oppose the creation of a private right-of-action under the Unfair Claim Settlement Practices Act and under the Unfair Trade Practices Act. A private right-of-action would permit an individual to bring an action against an insurer under one or both model acts. Currently, only an insurance Commissioner can bring an action under either model act. The NAIC Model Unfair Trade Practices Act does not include private cause of action.

Web Keywords: unfair trade practices


UNISEXRisk Classification: Generally

Position:Oppose legislation or regulation which would impair cost-based pricing by prohibiting insurers from using gender in pricing or underwriting insurance.

Web Keywords: unisex


VALUATION AND NONFORFEITURE


Position:Support the NAIC model laws for both valuation and nonforfeiture which have been enacted in all states.Valuation consists of determining policy reserves; the funds the company needs to enable it to meet policy benefit obligations. Nonforfeiture refers to the benefits available to policyholders who discontinue premium payments on their policies.Support the NAIC model revisions to the “Standard Valuation Law” (SVL) and “Standard Nonforfeiture Law” (SNFL) to implement principle-based reserves (PBR) in 2013 and later.Monitor any proposals relating to Regulation XXX. Regulation XXX also referred as “Triple XXX” is a common term used to identify the "Valuation of Life Insurance Policies Model Regulation" adopted by the NAIC in March 1999. The regulation addresses reserve issues related to uneven premium/benefit policies and universal life policies with secondary guarantees. It became effective in a number of states for issues of January 1, 2000 and later. NAIC Model 830 (Triple XXX) has been amended several times, most recently in 2009. States that adopted older versions may look to update.

Web Keywords: confidentiality, Regulation Triple XXX, nonforfeiture, valuation, principle-based reserves

B Valuation (Auerbach)


SR Liaison: Nation

VALUATION ACTUARY

Position:Support current NAIC amendments to the Standard Valuation Model Law and Actuarial Opinion and Memorandum Model Regulation. The actuary responsible for the company's valuation must furnish an opinion, supported by an actuarial memorandum, as to whether policy reserves are adequate in light of the company's assumed risks and asset mix.

Web Keywords: valuation actuary

B Valuation (Auerbach)

ISC Actuarial Opinion and Memorandum

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VARIABLE CONTRACTS: GENERALLY

Background: Variable annuities and variable life insurance are hybrid products with important insurance and securities components. The U.S. Securities and Exchange Commission regulates the securities features. State insurance commissioners in 48 jurisdictions have exclusive authority to regulate the insurance features. For two years, ACLI strongly opposed amendments to the Uniform Securities Act that would also give state securities commissioners’ jurisdiction over variable life insurance and variable annuities. These products are already subject to three layers of state and federal regulation. The addition of state securities jurisdiction would impose significant, unnecessary regulatory burdens on life insurers and their distributors. There has been no demonstration that these products are in need of an additional regulator. In federal securities regulation and state insurance regulation, ACLI seeks to achieve regulatory treatment appropriate to the insurance and annuity features of variable contracts.

Position:Oppose adoption of legislation that would move the enforcement of variable annuities from the insurance department to a state’s Attorney General Office, and that would define variable life insurance or variable annuities as securities under state securities codes.

Web Keywords: securities, securities laws, variable annuity, variable contracts, variable life insurance, variable products

B Variable Contracts (Lewis)

LILS#57 The Status of Variable Contracts Under State Securities and Insurance Laws

VIATICAL SETTLEMENTS Accelerated Benefits

Position:Support adoption of legislation/regulation which establishes reasonable consumer protection standards for viatical settlement arrangements, and which continues to allow policyholders the opportunity to enter into such arrangements.Support enactment of the NAIC Viatical Settlement Model Act and Regulation as one method of achieving the goal of consumer protection.Oppose the single licensing provision in the Model Regulation, which allows a licensed life insurance agent to act as a viatical broker with no prior testing or demonstrated competency in viatical settlement transactions. Despite strong opposition from industry, this amendment was adopted at the March 2004 NAIC meeting.

Compliance Notes:Relates to purchasing the rights to the death benefit proceeds under a life insurance policy from a policyholder in return for an immediate cash payment to the policyholder of a sum certain by private companies or brokers.

Web Keywords: broker-dealer, STOLI, structured settlements, viatical settlements

B ADVANCE

LILS #54 Life Settlement Requirements;

ISC STOLI / STOLI Maps (RETIRED)

SR Liaison: Walters

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VISION Background: Beginning in January 2018, ACLI began tracking supplemental products including absence management, accidental death and disability, dental, fixed-dollar indemnity, hospital reimbursement/confinement, stop loss and vision.

Position:


B

WAR: POLICY EXCLUSIONS Insurance Contracts: Generally

Policy Form Filing

Position:Monitor exclusions, which help an insurer manage risk. War exclusions typically exclude insurance coverage for loss or disability attributable to acts of war. Acts of war can be declared or undeclared as such, but they are usually made by governments against other governments. The exclusion can be further refined by reference to particular geographic areas, or theaters, of war.Support exclusions in general as traditional risk management techniques. Insurers use exclusions carefully lest they lose market share to others willing to assume the risk.

Web Keywords: risk classification, underwriting

B Life Contracts (Auerbach);

Reinsurance (Wolf);

Risk Classification (McGuffey);

LILS #52 Exclusions for Coverage

WITHHOLDING: CHILD SUPPORT

Position:Monitor bills that require life or health insurers to withhold insurance benefits to satisfy the child support obligations of the policyholder or beneficiary.

Web Keywords: data match

B ADVANCE all provisions related to an insurer’s obligation.

WORLDWIDE SOURCING

Position: Oppose bills that place restrictions on tax and fee benefits to entities that outsource jobs to foreign countries.

Web Keywords: worldwide sourcing

B

*Discretionary Law: can be B or AB. Laws on topics that are not normally advanced will be advanced if they contain a specific compliance requirement for insurers.

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NEW LTS KEYWORD

Related LTS Keyword

Background:

Position:SupportOpposeMonitor

Compliance Notes:

Web Keywords:

Service (Editor)

LILS## Title

ISC Title

*Discretionary Law: can be B or AB. Laws on topics that are not normally advanced will be advanced if they contain a specific compliance requirement for insurers.

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