The National Association of Insurance Commissioners, a national standard-setting and regulatory support organization comprised of insurance regulators from across the country, have passed new amendments to the Annuity Disclosure Model Regulation. The regulation determined how insurers released information regarding annuity payments to consumers. Previously, such information was withheld as much as possible by insurers, but the new amendments require that this information be put into the limelight for all to see. Changes to the rule will also require insurers to detail the practices they use in determining annuities and how these practices are formed.
One of the more prominent changes to the rule is the requirement placed on insurers to provide annuity illustrations. These are meant to offer consumers a visual point of reference when examining the information offered to them regarding annuities. The idea is to make understanding the system a little easier for consumers, but the illustrations will also help marketing organizations and brokers promote policies.
Regulators with the association are encouraging insurers to review the amended regulation to ensure they understand, and can adhere to, the new requirements therein. The association is expected to make additional changes in the coming months to help stem the prevalence of companies withholding annuity payments for deceased policyholders. Additional changes to the regulation also help insurers protect themselves against those taking out stranger-originated annuities – policies that cover persons that are expected to die within a year.