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THE NEW ENGLAND ENDORSES REGULATOR'S DRIVE TO INFORM INSURANCE SALES PRACTICES

 BOSTON, Sept. 20 /PRNewswire/ -- The New England, the nation's oldest mutual life insurance company, announced its backing of regulatory efforts to reform the way life insurers illustrate the value of their policies.
 "The industry's current practice often leaves consumers with erroneous impressions," said Kernan King, executive vice president and chief marketing officer for The New England.
 Sales illustrations typically project a policy's future value based on a company's current investment earnings, King said. "However, those projections are neither guaranteed or very reliable." King explained that a policy's value depends very much upon an insurer's current and future investment earnings. "It's impossible, however, to accurately predict future earnings because no one knows what the future investment climate will be like. A sales illustration therefore is no more than a guess at a policy's future value. Many consumers don't understand this," King thinks.
 Especially in today's declining interest rate environment, he believes the industry and consumers both would be better off if sales illustrations spelled out precisely what values are guaranteed and what values are only projected but not guaranteed. "The average sales illustration does not make this clear," he believes.
 Also, King favors emphasizing in sales illustrations a policy's past performance, possibly through regulations similar to what the SEC currently imposes upon the mutual fund and equity industry.
 Projecting a policy's future is useful in showing consumers how a policy might perform, believes King. But those projections should show several possible outcomes, such as how much a policy might be worth in a low and in a high interest rate environment.
 As regulatory reforms might be a year or so away from becoming law, King announced his company is in the process of changing its sales illustrations now.
 King's support of regulatory reform follows a recent announcement by the National Association of Insurance Commissions that changes in sales illustrations are needed.
 -0- 9/20/93
 /CONTACT: Peter Harrington, of The New England, 617-578-2729/


CO: The New England ST: Massachusetts IN: INS SU:

JL-DJ -- NE003 -- 3469 09/20/93 08:30 EDT
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Publication:PR Newswire
Date:Sep 20, 1993
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