Advocacy

Issues

Retained Asset Accounts (HB 2682)

Retained Asset Accounts are accounts wherien a beneficiary's payment is held in a corporate account (usually owned by the insurer) until the beneficiary decides on another option. House Bill 2682 (by Representative Matzie) prohibits the use of Retained Asset Accounts as "the sole means of settling claims against a life insurance policy" and requires a series of disclosures in the event a Retained Asset Account is used in the settlement of a claim. Issues have revolved around negotiability of drafts from the accounts and the backing of company assets in lieu of FDIC insurance. NAIFA-PA recommends that legislators take a slow and deliberate pace when examining Retained Asset Accounts. Regulators and the industry should be granted ample time to develop improvements to these accounts before legislation is enacted.

Stranger-Originated Life Insurance - STOLI (House Bill 2188)

A stranger-originated life insurance (STOLI) is a life insurance arrangement, in which a stranger initiates an insurance policy against someone's life and funds the premium payments. A recent U.S. Securities and Exchange Commission report said that "[a]s investment, STOLI policies may introduce particular risks for investors who purchase the policies, given the risk that insurers may contest them on grounds such as fraud of violation of insurable interest laws." House Bill 2188 (by Representative Frankel) would put into place restrictions on this practice. NAIFA-PA supports the bill.

Protect the Role of the Agent in Health Insurance System

Under the recently passed Federal healthcare legislation, Pennsylvania will have the option to set up its own Health Insurance Exchange. If Pennsylvania fails to act, the U.S. Department of Health and Human Services (HHS) will take over the role of planning and implementation of the Exchange. NAIFA-PA urges Pennsylvania policy-makers to recognize the important role of the agent in the healthcare delivery system. The agent assists in the streamlining of service delivery by answering consumer inquiries and advocating for the consumer in a way that others do not. We believe that it is good public policy for agents to maintain their role in the system in order to improve service delivery and attain cost-efficiencies.

Senior Specific Designation Prohibition (HB 2420)

Recent action has taken place on this bill which prohibits insurance agents and brokers from using non-existent or self-conferred senior-specific certifications and designations. It would acknowledge certifications issued by accredited entities, such as the National Commission for Certifying Agencies. It also empowers the Insurance Department to govern the use of such certifications or designations – authority which the department currently enjoys through regulation.  The bill was recently reported from the House Insurance Committee and awaits action in the Appropriation Committee.  NAIFA-PA supports the intent of this measure, but if this is a real consumer protection issue, then efforts should be made to ensure adequate funding of the Insurance Department so they can properly address the situation in the marketplace. 

Consumer Education in Small Face Amount Life Insurance Policies Act (HB 2762) This is an NAIC based measure aimed at setting rules for ensuring that the purchasers of small face amount life insurance policies have information on those policies where over the term of the policy, premiums will exceed the face values of the policy.  Insurers and their producers would be required to provide information to policyholders or certificate holders who ask questions about the disclosure statements which:  

• Clearly and prominently disclose the fact that premiums paid over the term of the policy will exceed the face value of the policy on the face of the policy; Clearly and prominently disclose alternative premium payment plans and products on the face of the policy (if there are no alternative plans, this must be disclosed);and
• Provide, and clearly and prominently disclose a 10-day free look, no penalty period.

The bill remains in the House Insurance Committee.