Several posts here have discussed items from the NYSID's 2006 Annual Report, which can be found at www.ins.state.ny.us/downpdf.htm#annrpt. One portion of that report that is getting increasing attention and on which I have received a significant number of inquiries is the reference on page 38 to products "that would wrap mutual funds" with living benefit guarantees similar to those found on variable annuities.
I have had several in-depth discussions with the Department related to these products. The degree to which there may be room for their approval in NY is currently unclear. The brief mention in the 2006 Annual Report concludes with the statement: "The Department has significant concerns with exposure to market risk for all products with guaranteed living benefits."
Continue Reading...The May 28, 2007 edition of the National Underwriter, www.lifeandhealthinsurancenews.com, had an interesting article on these relatively new benefits. As I read it I thought back to my post here on May 15, 2007 on a related topic and the NYSID's position that an asset-based charge is not permitted (unless it is capped at $50.00/year based on a restrictive interpretation of the non-forfeiture law). One of my arguments to the Department on this issue has been that an asset based charge can be viewed as pro-consumer. The consumer can look at the benefit's value to them - the value of the guarantee - and make a decision about whether the guarantee is worth the charge. Especially with a fixed annuity when the asset base is more predictable, the charge can be evaluated. The NU article concludes that the guarantee in these fixed products is significantly smaller than the guarantee provided by a similar benefit on a variable annuity, but that for some consumers, this guarantee does have value.
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While there are still some files that are not moving quickly at all - those seem to be more complicated ones with questions identified by new staff for more senior members who are pulled in many directions. For more typical filings, there does seem to be progress! And dramatic progress at that!
Today I received an approval of a filing made on May 22, 2007. It was approved in 8 days! I don't think we can ask for more than that! What a great way to start the weekend!!!
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