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NAIC to Draft Disclosure For Small Life Policies.

NASHVILLE, Tenn. -- Regulators for many years have wrestled with issues relating to the consumer value of life insurance policies with small face amounts. At the Spring Meeting, the Small Face Amount Working Group of the National Association of Insurance Commissioners' Life Insurance and Annuities Committee discussed its two-pronged effort to shed new light on those issues.

The working group has embarked on a project to draft a statement that would warn buyers of these policies that they may pay more in premiums than they will receive in death benefits. The disclosure statement would apply to policies with face amounts up to $10,000, but the group might raise that amount to $15,000.

Leslie Jones of the South Carolina Department of Insurance and John Hartnedy of the Alaska Division of Insurance are working on the statement with representatives of the industry, the American Academy of Actuaries and consumer representatives. They planned to accept ideas until April 20, and said they would have the proposed disclosure statement ready in time for the NAIC's Summer Meeting in June.

The working group also has accepted an offer by the small-face-amount life industry to pay for two independent studies to examine issues of value. One will be an actuarial study headed by W. Michael Pressley, a principal with Tillinghast-Towers Perrin in Dallas and a member of the academy. Working group Chairman Ernst Csiszar, director of insurance in South Carolina, said this study would consider pricing assumptions, premiums and other actuarial factors insurers use to construct policies.

The other will be an economic study by Michael Porter of Harvard University and author of the book, Competitive Strategy.
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Comment:NAIC to Draft Disclosure For Small Life Policies.
Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:May 1, 2001
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