In a move that goes contrary to regulatory trend, Rep. Robert R. Damron, of Kentucky’s banking and insurance committee, has sponsored a bill that would prohibit restrictions on owners selling their guaranteed living and death benefits in the secondary market. Darla Mercado reports in a recent [article] in Investment News that the bill cleared KY’s House Standing Committee on Banking and Insurance. Mr. Damron says “To me, these benefits are something people purchase then they buy an annuity. You’re paying for the living-benefits rider, and it belongs to you, so it’s a property issue.” While he reportedly stated to Ms. Mercado that the odds of passage this year seem slight, he was also quite clear that we would re-work and reintroduce it next year if necessary.
On a not-directly-related note, but one that was very interesting to me:
While referring to the move being one that bucks the trend among state insurance regulators, no specific state position was discussed in any depth. Instead, Ms. Mercado referred to the position of the Interstate Insurance Product Regulation Commission (the “commission”), and noted that among the 30 members of the commission that voted, only Indiana objected to a [new uniform standard] that permits insurers to terminate, at their discretion, guaranteed living and death benefits in the event of a change in ownership or assignment.
Despite the fact that product submissions can be made directly to the Kentucky Insurance Department, no reference at all was made to the Kentucky DOI’s position on this - just the commission. Similarly, opponents of the measure proposed a study of the uniform standards promulgated by the commission rather than looking to study the position of the Kentucky DOI. That is a very tangible demonstration of where we are in product regulation today.