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CEFLI Life & Annuity Marketplace Summit Meeting – A Non-Advocacy Forum for Regulatory and Industry Discussion.

Final Agenda

Regulators and Industry Representatives share insights on suitability and complex products.

CEFLI continued its role as a leading, non-advocacy organization by bringing together regulatory and industry representatives to discuss current marketplace challenges at the recent CEFLI Life & Annuity Marketplace Summit Meeting in Des Moines, Iowa.

This unique Forum offered an opportunity for representatives of over 50 life insurance companies to engage in direct, informal dialogue with regulators from several state insurance departments to hear their observations of various sales activities in today’s life and annuities marketplace.

CEFLI was pleased to have Iowa Commissioner Nick Gerhart and Wisconsin Commissioner Ted Nickel appear on a panel to share their perspectives regarding some of the challenges related to selling increasingly complex life insurance and annuity products.  Both Commissioners shared “real-life” experiences encountered by family members who experienced challenges when attempting to understand illustrations associated with the sale of complex products.

The Summit Meeting also included detailed discussions of complex products, suitability standards, complaints and producer training.  In each instance, regulatory and industry representatives shared their observations concerning current practices and challenges in today’s life and annuity marketplace.

The regulators in attendance confirmed their support for product innovation but shared concerns that the complexity of certain types of new products may cause confusion for producers and consumers.

One of the highlights of the meeting was a panel comprised of several “thought leaders” on the issue of Suitability who served as both regulators and industry professionals during the course of their careers.  Therefore, this panel was able to offer a unique, “dual perspective” in their analysis of current suitability issues.

Patrick Nelson (current Chief Suitability Officer with Allianz Life and former Deputy Commissioner of the Insurance Division of the Minnesota Department of Commerce) was joined by current Iowa First Deputy Commissioner Jim Mumford (who worked previously within the life insurance industry) and Thomas Sullivan, current partner with PricewaterhouseCoopers (who served previously as the Chair of the NAIC Life Insurance and Annuities (A) Committee while serving as the Connecticut Commissioner of Insurance) shared their perspectives on the development of the NAIC Suitability in Annuity Transactions Model Regulation and its impact upon current marketplace practices.

It was heartening to hear confirmation from several of the regulators during the Summit Meeting that, since introduction and adoption of the NAIC Suitability in Annuity Transactions Model Regulation (and its 2010 revisions to promote supervision and producer training), annuity complaints have declined significantly.  Several of the regulators commended the extent to which life insurance companies have taken appropriate steps to comply with the requirements of the Model Regulation.  The Iowa Insurance Division will reportedly continue to monitor compliance with the requirements of the Model Regulation by reviewing suitability reports generated by life insurance companies.

While the overall discussion did not suggest an affirmative movement toward development of a suitability law or regulation pertaining to life insurance products, there was some suggestion that additional guidance may be offered to life insurance companies regarding the manner in which complex products are distributed in the marketplace.  There also seemed to be a general consensus that, as product designs grow more complex, producer training strategies may need to be enhanced to promote a thorough understanding of these products.

Several company representatives shared innovative strategies that utilize a multidisciplinary approach to product design as a way to develop appropriate disclosures and training strategies to promote thorough understanding of complex products.  Moreover, company representatives confirmed that they have implemented several different compliance strategies that go beyond the requirements of existing laws and regulations to enhance the “customer experience” as a way to be responsive to any consumer concerns that may arise in the marketplace.

CEFLI Forums such as the Life & Annuity Marketplace Summit Meeting are designed to seek ways in which regulators and industry representatives may work collaboratively in a non-advocacy environment to promote overall marketplace improvements.  Based upon the very positive comments both regulators and industry representatives shared following the conclusion of the meeting, the CEFLI Life & Annuity Marketplace Summit Meeting was considered to be a resounding success!

CEFLI looks forward to future opportunities to build upon its industry-leading role as a non-advocacy organization to gather a wide range of perspectives from regulatory and industry representatives concerning today’s current compliance and ethics challenges.

CEFLI’s next Summit Meeting on Unclaimed Property will be held on April 30th at the Minneapolis Convention Center. We hope you will be able to join us!