The ending of one year and the beginning of another, for many insurance professionals, means year end financials to be prepared and annual assessments to be made. And while many functional areas revolve around the calendar year, the market conduct exam process and adherence to regulatory requirements certainly represents a compliance continuum.
With the start of 2011, we can expect new legislative and regulatory proposals which serve to further many of the initiatives and hot topic issues we saw in 2010 affecting life insurance and annuities. Anticipated additional state adoptions of the Suitability in Annuity Transactions Model Regulation (Model 275), the strengthening of annuity disclosure requirements, and continued issuance of directives on the use of retained asset accounts as a settlement option are all possible players in the mix of upcoming new requirements. It is not only insurers’ procedures that will be incorporating the new and revised requirements, as regulators too may be modifying their checklists to incorporate newly established insurer responsibilities across all lines of business.
Regarding the significant changes brought about by Model 275’s changes in March 2010, as more states adopt the latest Model, insurers could expect a level of scrutiny in the market conduct review focusing on areas including product specific training, insurer supervision, and transactional (i.e. the secondary) review.
Additions to market conduct checklists may also evolve with further annuity disclosure requirements and states’ actions on retained asset accounts this year. While the NAIC’s Annuity Disclosure Model Regulation is currently undergoing review by the Annuity Disclosure Working Group, Idaho took steps last year in specifying minimum information which must be included in the disclosure document required under SB 1327 effective on July 1, 2010. Retained asset accounts have been a hot topic of late, with New Hampshire being the most recent state to address this issue with the Department’s release of INS NO. 10-046-AB on December 21st. The disclosure standards in that bulletin are similar to those found in other states taking action throughout the latter half of 2010.
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