Title: National Standards: Regulation of Insurance Products
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2MEETING AGENDAMarch 12, 2013
- Welcome and Overview
- Structure of Uniform Standards
- Scope of Uniform Standards by Product Line
- Actuarial Requirements
- Common Filing Objections by Product Line
- Other Issues
- Questions and Conclusion
3The IIPRC Today
4Overview of Insurance Compact
- Innovative vehicle formalizing joint and
cooperative action among states - Leveraging regulatory expertise to establish
Uniform Standards - Central clearinghouse for prompt review of
asset-based insurance products using the Uniform
Standards
5Overview of Insurance Compact
- Compact filings submitted through the System for
Electronic Rate and Form Filing (SERFF) - File one submission under one set of standards
for one review and one approval valid in all
Compact jurisdictions. - Uniform Standards for individual and group life,
annuity, disability income and long-term care
6Compacts Value-Added Benefits
- Submit one product filing vs. state-by-state
- Use one set of comprehensive Uniform Standards to
prepare product forms vs. multiple state
variations - Undergo one filing review vs. many reviews
- Reduce duplicative paperwork, processes and
systems implementations
7Compacts Value-Added Benefits
- Receive one approval on behalf of 41 Compacting
States for individual life, annuities, and
disability income - Receive one approval on behalf of 37 Compacting
States for individual LTC products - Compact-approved LTC forms can be submitted for
Partnership via easier certification /approval
process
8Compacts Value-Added Benefits
- Straightforward filing process using SERFF
- Tools and checklists for filers on IIPRC web site
- Prompt, easy access to professional team of
product reviewers and actuaries who will work
with companies pre- and post-filing to answer
questions and provide guidance for compliance - Average approval in 60 review days or less
9Compacts Value-Added Benefits
- Easy to update product filings and add states to
previously-approved filings - Mix and match accommodates product needs
- Implement and administer standard product forms
across Compacting States - Streamlined systems programming, testing, rollout
- Simplified producer training
10Uniform Standards
- 86 Uniform Standards adopted to date
- Individual Life
- Individual Annuities
- Individual Long-Term Care
- Individual Disability Income and Business
Overhead Expense - Group Life
- Combination product filings accepted
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12Getting Started with the Compact
- Visit the IIPRC website
- insurancecompact.org
- Check out the Company Resources Web Page
- View IIPRC Tutorials
- Contact IIPRC Office with any questions or to set
up a one-on-one webinar - Reviewers are available to answer questions both
before and after you make your filing
13Getting Started with the CompactProduct Review
Team
- Charlie Rapacciuolo is our Product Operations
Coordinator - David Morris is our Primary Life Reviewer
- Karen Givens is our Primary Annuity Reviewer
- Maureen Perry is our Primary LTC/DI Reviewer
- Alice Fontaine is our part-time Actuary
- Jeanne Daharsh is our full-time Actuary
14Getting Started with the Compact
- IIPRC has unique submission requirements
(supporting documentation) - Payment of filing fees
- Identification of applicable Uniform Standards
- Actuarial memorandum / Rate Schedule for LTC
- Flesch Score certification
- Statement of Variability
- Statement of Intent Schedule
15How to Prepare a Compact Filing
- Review the Uniform Standards on the Record
- Review the Operating Procedure for the Review and
Filing of Product Filings - Review the TOI Link to see the variety of
products that can be filed - Print off the applicable reviewer checklists
- Review the Filing Information Notices
- Review IIPRC General Instructions in SERFF
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17Filing Information Notices
- Issued by the Compact Office
- Explains or clarifies steps or requirements in
the process for filing and review - References applicable Uniform Standards or
Operating Procedures - When involves interpretation of Uniform Standard,
will consult PSC or Actuarial Working Group
18Filing Information Notices
- FIN 2010-2 Bonus Feature for Deferred Annuity
- FIN 2012-2 Rider Charges for GLB on NV Annuity
- FIN 2012-3 Changes in Nonforfeiture Interest
- FIN 2012-4 Product Filings Subject to AG38
- FIN 2013-1 Guaranteed Living Benefit Amounts
Contingent on Inability to Perform Activities of
Daily Living - FIN 2013-2 Individual Long-Term Care Filings
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20Questions?
21Structure of Uniform Standards
- Cover Page
- Uniform Standard Title Number
- Short overview of Purpose Scope
- Adoption Effective Date
- Rules Repealed, Amended or Suspended by the Rule
- Statutory Authority
22Structure of Uniform Standards
- First Page
- Scope -- carefully review to see what is and what
is not covered by the standard - Definitions only applicable to terms used in
Standard - Drafting Notes provide guidance for filers and
reviewers
23Structure of Uniform Standards
- 1 Additional Submission Requirements
- Components of filing including Actuarial
Memorandum requirements - Variability requirements
- Readability requirements
- 2 General Form Requirements
- Cover Page
- Specifications Page
- Fairness
-
24Structure of Uniform Standards
- 3 Contract Provisions
- Alphabetical order
- Several provisions are common across standards
- 4 Additional Standards for Fraternal Benefit
Associations - 5 Specialized Products/Marketing
- Appendices
- Pay particular attention to nonforfeiture
demonstration requirements or certifications
25Life Uniform Standards
- Term Life
- Whole Life
- Endowment
- Non-Variable Adjustable Life
- Variable Adjustable Life
- Each has Single Premium vs. Multi pay version
- Joint Last to Die vs. Single Life version
26Universal Life Uniform Standards
- No lapse requirements in Section 5
- Appendix for Nonforfeiture demonstration
- Appendix for Sample certification of compliance
27Benefit Features on Life
- Return of Premium on Term (IIPRC-LB-04-I-ROP)
- Graded Death Benefit on Whole Life
- Additional Term riders
- Index linked crediting for UL
- Overloan protection for UL
- Accelerated Death Benefits
28 29Core Annuity Uniform Standards
- Deferred - Non-Variable and Variable versions
- Specific instructions on prospective and
retrospective tests for General Account - Retrospective required for Variable investment
options - Immediate Non-Variable and Variable versions
- Longevity Non-variable only
30Benefit Features on Annuities
- Bonus Benefits
- Variable
- Bonus is considered part of Gross Consideration
- Certification required on tradeoff
- Non-Variable
- Bonus not considered part of Gross Consideration
- Level imputed interest rate in Prospective Test
31Benefit Features on Annuities
- Index-Linked Interest
- Non-Variable only
- Prospective Test and level imputed rate
- Market Value Adjustment (MVA)
- Non-Variable and the general account portions of
variable annuities (IIPRC-A-07-I-2) - Separate Account (IIPRC-A-07-I-3)
- MYGA Definition does not include Index
32Benefit Features on Annuities
- Guaranteed Minimum Death Benefits Variable Only
- GMDB for Non-Variable being considered
- Guaranteed Living Benefits
- Variable vs. Non-Variable
- Charges on Non-Variable cannot impact base policy
Retrospective minimum values. - Examples of impact on values of changes or
withdrawals both before and after election
33 34Long-Term Care
- Ten Uniform Standards
- Application, Policy, Forms, Outline of Coverage,
Benefit Features, Rates, and Advertisements - Adopted August 13, 2010 with effective date of
December 1, 2010. - Rate standards updated August 11, 2011
35Long-Term Care
- Uniform standards only apply to new issues
- Do Not permit mix and match within product
- Combination mix and match filings are allowed
- Can be used to file with state for Partnership
status
36LTC Rate Standards
- Rate standards address both initial rates as well
as rate increases - Issue Age Rate Schedules
- Modified Rate Schedules
- Not permitted in Colorado, Illinois, Maryland,
Oklahoma, and Washington - Only available if, in addition to the modified
rate schedule, an issue age rate schedule is also
approved by the IIPRC
37Long-Term Care
- Annual actuarial certification
- Currently marketed rates
- Closed forms
- Triennial submission of the supporting actuarial
memorandum
38Long-Term Care
- Policy Form certifications
- Found in LTC Core Standards
- Compliance of non-forfeiture and inflation
benefits - Exemption for / products
- Rate Memorandum certifications
- Template for detailed assumptions
39Disability Income
- Effective 1/12/12
- DBOE effective 2/19/12
- Loss Ratio requirements
- Sample format in Appendix
- Separate standard for Rate Increases vs. Initial
Rates
40 41Actuarial Requirements
- Actuaries should be familiar with all applicable
standards for forms submitted - Scope of Standard
- Actuarial Memorandum Requirements
- Appendices
- Templates for nonforfeiture demos
- Templates for Actuarial Certifications
- Specific instructions regarding demos and
assumptions
42Actuarial Requirements
- Common Actuarial Objections
- AM material attached under Actuarial Memorandum
field in SERFF - Actuarial Certifications Need to be Submitted
- Signature Requirements for AM
- Consistent with SOV ranges
- Impermissible references to state law
43Common Filing Objections Pitfalls Traditional
Life
- Issue age and minimum issue amounts
- Ranges and charges
- Demonstrations or rationale of Nonforfeiture
compliance (even ETI, RPU, Child riders) - Guaranteed Charges for Additional Term if
Indeterminate
44Common Filing Objections Pitfalls - UL
- Issue age and minimum issue amounts
- Follow template for demonstration with respect to
BOY/EOY - Sample calculation of initial expense charge
- Juvenile issue age mortality
- No lapse rider impact on form compliance
45Common Filing Objections Pitfalls - Annuities
- Range of Issue Ages
- Bonus ranges gt 0
- MYGA definition and MVA requirements
- Prospective Test Maturity Value
- Sample calculation to easily produce values
- GLB specified examples lots of scenarios to
cover
46Common Filing Objections Pitfalls Long-Term
Care
- Inflation and nonforfeiture certifications
- Insufficient detail in assumptions
- Demonstration that margins dont deviate
materially across issue ages, class, plan - No statement in rate schedule that they are the
rates to which the actuarial memo applies
47Common Filing Objections Pitfalls Long-Term
Care
- Statement that rates not less than the rates for
existing similar forms except for reasonable
differences in benefits - Enough detail in the table of relationship
between net and gross premiums - Rates and AM in Rate/Rule section of SERFF
48Common Filing Objections Pitfalls Disability
- Insufficient detail in assumptions
- In addition to description and source of each
assumption - Missing statement regarding overall expenses plus
contingency/risk margins as a percentage of
premiums on a PV basis
49Common Filing Objections Pitfalls Disability
- No statement in rate schedule that they are the
rates to which the actuarial memo applies - No explanation of actuarys review of policy
design, underwriting, and claim adjudication - Rates and AM in Rate/Rule section of SERFF
50 51Updates for AG38 Compliance
- Monitoring AG38 developments
- Consider using the Compact to file updated
products for AG38 compliance - IIPRC will conduct form non-forfeiture review
- FIN 2012-4 Issued December 20, 2012
52Nonforfeiture Interest Rates
- Consider using the Compact to file updated
products - Compact does recognize the one-year delay
- Changes to non-forfeiture rate for a product
previously approved by the Compact requires prior
approval - Request that filing be re-opened
- FIN 2012-3 Issued September 20, 2012
53Statement of Intent Schedule(Mix and Match)
- Forms filed with Compact should not affect values
in state-approved form (and vice-versa) - State-approved forms cannot be mixed and matched
with Compact-approved forms in order to comply
with a Uniform Standard (Compact form must fully
comply with applicable standard)
54Other Current Issues
- Reopen filing to update MIB statement no filing
fee if certify no other changes - Group Term Life Policy Standards effective
January 6, 2013 - Non-variable Annuity GMDB Standard Exposure
draft open for comment (due 3/19) - Commencing 5-year review process
55Questions?
56CONTACT IIPRC
- For more information, please contact us at
- Comments_at_insurancecompact.org
- www.insurancecompact.org
- Phone (202) 471-3962
- Jeanne M. Daharsh, FSA, MAAA
- Consulting Actuary, IIPRC
- jdaharsh_at_insurancecompact.org