Commissioner Burnes on Unisex Annuities at LHCA
Speaking at the LHCA Conference in Boston on Friday, Commissioner Burnes addressed a participant question regarding the unisex annuity legislation, discussed here previously. The commissioner wanted to make sure that all attendees realized this was not a Division initiative and that they were doing what they could to mitigate the challenges of the fast-approaching implementation date of 1/1/09, but she also advised that companies would need to go to the legislature for relief as the Division's hands are tied by the terms of the new law. She indicated that she would be meeting with LIAM Representatives tomorrow and directly with companies later in the week.
As I continue to talk to companies about this, it is clear that there are those who do not realize that this legislation differs significantly from that in Montana, in that it is extra-territorial with respect to MA residents. In this forum, I previously addressed some extra-territorial situations, but another that seems to be equally troublesome would occur when an individual has purchased an annuity in another state but then moves into MA. The law appears to require that individual get a new contract with unisex rates at that time.
With the well-known exception of NY's compensation laws, I do not think there has ever before been a state law that so directly challenged the standard provision in all life and annuity contracts, that the contract is subject to the laws of the state in which it is delivered. Even NY's compensation requirements are at least set at the time of issue, even though they are extra-territorial. Here, there is no certainty. What would happen to the person's contract described above if, after living in MA for a couple of years, s/he moves and is no longer a resident of MA? Does s/he retain the unisex rates? Does her/his contract revert to the original? Does it matter whether the original rates are more favorable or the unisex ones are? These are but a few of the questions that are likely to arise under the law scheduled to go into effect on January 1.
