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Some Life Insurers Getting Reserve Relief Through 'Backdoor' Efforts

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Some Life Insurers Getting Reserve Relief Through 'Backdoor' Efforts I N S U R A N C E R E G U L A T O R Y E X A M I N E R S S O C I E T Y Some Life Insurers Getting Reserve Variable Annuities Relief Through ‘Backdoor’ Efforts Coming Back to Bite Life Insurers by Steve Tuckey, Special to The Regulator The current financial turmoil seems tate insurance regulators to have bolstered variable annuities’ have come under fire for (VA) status as the top whipping allegedly granting backdoor boy in the financial products capital and reserve requirement realm as questions about reserves reliefS to life insurance companies struggling and regulatory turf wars continue with deteriorating conditions that may soon unabated. force them to make difficult choices to maintain Product sales sank in 2008 as solvency standards. concerns about falling stock prices In the weeks following the Jan 29 National Association of Insurance and rising fees led investors to shy Commissioners Executive Committee’s stunning 16-1 rejection of away from the product. According previously approved fast-track solvency relief measures, regulators’ to one trade group, LIMRA attempts to permit case-by-case exceptions have raised concerns from International, sales fell from $48 both consumer groups and others that such measures are being granted billion in the fourth quarter of 2007 without a full airing to expose the potential dangers to consumers. to $38 billion in the third quarter of “What they did not want to do publicly, they are trying to do behind 2008. The Kehrer-Jackson Annual closed doors,” said one regulator quoted anonymously in The Washington Monthly Bank Annuity Sales Post. “I think this jeopardizes policyholder security.” Survey reported that $1.3 billion in variable annuities were sold in the The regulator was referring to a closed conference call on Feb. 6 in banking channel in September 2008 which commissioners discussed how to implement so-called “permitted compared to $2.3 billion in October practices” to struggling companies that would permit them to implement 2007. those solvency relief measures previously rejected by the Executive Committee. Regulators have said they have always had the flexibility to As the product took off in the grant such relief, but with requests pouring in from companies across the boom years of the last century, nation, the issue becomes how rare such exceptions are and under what conditions they are granted. continued on page 8 In an e-mail exchange with Robert Hunter, insurance director for the Consumer Federation of America, NAIC vice president and Iowa MARCH 2009 commissioner Susan Voss wrote “I certainly never agreed case-by-case should be for all or even more than a very few insurers.” President’s Column .............................. 2 Commissioner Guide ......................... 10 She was reacting to concern expressed by Hunter that such relief Auto Uninsured Rising........................... 12 measures would amount to regulators “anointing winners and losers” in IRES Chapter News ............................ 15 doling out such relief measures “like lollipops at a barbershop.” Regulatory Roundup ............................ 16 continued on page 4 Casual Observations ............................. 18 ® Wayne Cotter, CIE, Editor From the President [email protected] Kathleen McQueen, Associate Editor PUBLICATIONS COMMITTEE : Polly Chan, chair • Vi Pinkerton, vice chair • Christel Szczesniak • Stephanie Cook • Angela Ford Spring is in the Air • Laura Price • Madonna Jones • Mary Darby • Melissa Hull • Wanda LaPrath IRES Officers & Board of Directors PRESIDENT ell, it’s March again and IRES just Jo A. LeDuc, CIE, MCM, WI...608-267-9708 ... [email protected] passed the PRESIDENT-ELECT half-way mark Dennis C. Shoop, CIE, MCM, [email protected] W of its Committee year. With PAST PRESIDENT Polly Y. Chan, CIE, [email protected] spring in the air (or not, VICE PRESIDENT depending on where you Leslie A. Krier, AIE, WA ...360-725-7216 [email protected] are), it seems like a good time SECRETary to provide an update on the Anne Marie Narcini, CIE, MCM, [email protected] TREASURER many things the committees Gary W. Kimball, CIE, MCM, [email protected] have accomplished so far this AT LARGE year and to offer some insight Thomas L. Ballard, CIE, MCM, [email protected] into the items on which the committees continue to Board of Directors Thomas L. Ballard, CIE, MCM, Georgia Katie C. Johnson, AIE, Virginia work. Betty M. Bates, District of Columbia Gary Kimball, CIE, MCM, Missouri Paul J. Bicica, CIE, Vermont Leslie A. Krier, AIE, Washington Joe F. Bieniek, NAIC Jo A. LeDuc, CIE, MCM, Wisconsin The Accreditation & Ethics Committee, chaired Holly L. Blanchard, Nebraska Stephen M. Martuscello, CIE, New York Polly Y. Chan, CIE, California Hazel W. Mosby, AIE, District of Columbia by Anne Marie Narcini, has been especially Kim Cross, Iowa Anne Marie Narcini, CIE, MCM, New Jersey Karen L. Dyke, CIE, Nebraska Cristi S. Owen, Alabama busy. So far, they have updated the NICE manual Dudley B. Ewen, AIE, Maryland Violetta R. Pinkerton, CIE, Colorado Angela K. Ford, CIE, North Carolina Gene Reed, Delaware to include the many changes made last year Larry D. Hawkins, MCM, Louisiana Dennis C. Shoop, MCM, Unaffiliated Martin J. Hazen, Kansas Nancy S. Thomas, CIE, Delaware and added several course options to the AIE Michael W. Hessler, CIE, Illinois Kirk R. Yeager, CIE, MCM, unaffiliated curriculum. The Committee continues to work on EX E CUTIV E COMMITT ee CHAIRS Executive .................................Jo A. LeDuc, CIE, MCM, WI several important issues, such as reviewing the Accreditation & Ethics ..........Anne Marie Narcini, CIE, MCM, NJ treatment of continuing education (CE) credit Meetings & Elections ............ Thomas L. Ballard,CIE, MCM, GA for online courses, investigating the possibility Publications ................................ Polly Y. Chan, CIE, CA Education ...................... Dennis C.Shoop, CIE, MCM, unaffiliated of allowing CE credit for members who help Membership ...............................Leslie A. Krier, AIE, WA IRES outside of regulator Committee work, and Finance ..............................Gary W. Kimball, CIE, MCM, MO exploring the feasibility of creating a professional Baltimore 2009 CDS: Co-Chairs designation program for regulators who work Stephen M. Martuscello, CIE, New York • Dudley B. Ewen, AIE, Maryland for consumer services divisions of insurance SE CTION CHAIRS MARK E T RE GU L ATION LIF E -HE A L TH departments. Anne Marie Narcini, CIE, MCM, New Jersey Daniel Stemcosky, AIE, MCM, Pennsylvania FINANCIA L Under the direction of Gary Kimball, the Donald Carbone, CIE, Delaware ENFORC E M E NT & COMP L IANC E Budget & Finance Committee completed its most Betty Bates, Washington, D.C. CONSUM E R SE RVIC E S & COMP L AINT HAND L ING Hazel Mosby, AIE, Washington, D.C. John Lamke, Louisiana important task of the year, assembling the 2009 INDUSTRY TRACK PROP E RTY -CASUA L TY Ron Kotowski and David Kenepp IRES budget. I am happy to report that the budget Eric Nordman, CIE, NAIC has been adopted by the IRES Board and can be THE REGULA T O R is published every other month by the www.go-ires.org found in the Members Area of the IRES Web site. INSURANCE REGULATORY e-mail: [email protected] ©2009 , All Rights Reserved, The Committee has now turned its attention to EXAM I NERS SOC I ETY by the Insurance Regulatory Examiners Society 12710 S. Pflumm Rd., Suite 200 Olathe, KS 66062 arranging for an independent review of the IRES 913-768-4700 FAX 913-768-4900 Opinions expressed in this publication financials. IRES Continuing Education Line: 913-768-NICE are the authors’ and do not necessarily represent the opinions of the authors’ David V. Chartrand, executive secretary employers or IRES. The Education Committee, chaired by Dennis Susan Morrison, office manager & continuing ed coordinator Legal Counsel: William C. Jolley, LATHROP & GA G E , L.C. Shoop, has made significant progress on the 2 The Regulator/MAR 2009 2009 Annual Career Development Seminar (CDS). of implementing new procedures in response to a Having completed the planning of the workshops change in the IRS tax form filed each year by IRES. and general sessions, the Committee will now put I want to extend my sincere thanks and the finishing touches on the CDS including finding gratitude to the Board, Committee Chairs and top-notch speakers for all the wonderful sessions all of the Committee members, too numerous they have planned. Everything you need to know to name. It is the countless hours of time that about the CDS can be found on the IRES Web site. these volunteers have graciously donated that The Meetings & Elections Committee, chaired have helped make IRES the strong and vibrant by Tom Ballard, has selected Minneapolis, MN as organization that it is. the location for the 2011 CDS. Beginning in 2010, As always, if you have any questions, please the NAIC will meet three, rather than four, times contact me at [email protected] or (608) a year. Its summer meeting is scheduled for early 267-9708. August 2010 and would create a conflict with the 2010 CDS dates. As a result, the Committee has approved changing the dates for the 2010 CDS to avoid the conflict. Jo A. LeDuc, CIE, MCM IRES President The Committee is currently seeking individuals interested in running for the Board and selecting target cities for the 2012 CDS. The Membership & Benefits Committee has also been very active again this year. Chaired by Leslie Krier, the Committee has a lot in the works, Looking back? including finalizing our outing to Camden Yards, home of the Baltimore Orioles, during the 2009 CDS; gearing up to sell IRES shirts; finalizing a handbook for State Chairs; and planning the Online delivery of The Regulator now available publication and sale of an IRES cookbook.
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