Technology is The Topic at ACLI Legal and Compliance Meeting

Coeur D’Alene, Idaho

As I traveled back from the beautiful city of Coeur D’Alene, Idaho after the ACLI Legal and Compliance Meeting, I was struck by how the topics have changed recently. At this year’s conference, the DOL rule was certainly present as a topic, but not nearly so much in the foreground as it has been in recent years. Technology, on the other hand, was at least part of every session.

Cybersecurity not only had its own session: it also crept into almost all the others in one way or another. Innovation was equally prominent, as the need to innovate made its way into most conversations. Frustrations with the challenges of regulatory efforts to both allow and restrict innovation were also on many lips.

There were no clear solutions to the challenges posed by these issues, but it was clear that internal legal and compliance efforts, as well as regulatory resources, are being pulled and strained by both. It is an interesting and demanding time. So many more meetings and discussions are to be had as we, collectively as an industry, begin to do more than merely identify the issue, but we continue to dig in and do the work.

Update to August 3, 2015 Cybersecurity Post

In my post regarding the ACLI conference sessions on cybersecurity, I indicated that the speakers thought we might see actual legislation on this topic despite the partisan divisions that otherwise have generally paralyzed any federal action. However, just a couple of days later, the New York Times published Cybersecurity Bill is Latest to Be Delayed in Senate. The article makes clear that there are many obstacles to any legislation in the current Congress, despite positions like that of Maine senator Susan Collins: 

Our nation has unparalleled strength,” said Senator Susan Collins, Republican of Maine, who has been working for years to get a cybersecurity bill out of the Senate. “But cyberspace allows much weaker adversaries to target our people, our economy and our military.” She added, “We already know many of the steps necessary to reduce the likelihood of a cyber 9/11, yet many of these actions have not yet been taken in either the government or in the private sector.

ACLI Session: All ‘Bout That Discretion

In the session at ACLI’s Legal and Compliance Section’s Annual Meeting, It’s All ‘Bout That Discretion, ‘Bout that Discretion, there were more than a few in the room who were not familiar with the pop song that inspired the title: All About That Bass by Meghan Trainor. But once we got past that pop culture reference, we were in familiar territory. The three attorneys from Carlton Fields Jorden Burt (Jason Gould, Steven Kass, and Shaunda Patterson-Strachan) presented on litigation trends involving nonguaranteed elements. It was all about the discretion insurers may have – and may not have - with respect to nonguaranteed elements.

Since I am not a litigator and I focus on regulatory trends more than litigation trends, I appreciate the opportunity to hear about litigation in our field.

The presenters divided litigation on nonguaranteed elements into three waves. The first was over DAC tax charges, the second on mortality (COI) adjustments, and the third on the methodology for setting the initial rates. They said that the first two waves were largely decided against insurers, but the third, more recent, wave has been more favorable to insurance companies.

One of the cases they mentioned was Eller v. EquiTrust Life Insurance Co. (12-17119, February 25, 2015). The law firm discussed this putative class action in more detail in their Spring 2015 edition of Expect Focus (p. 4). Christine Stoddard wrote the magazine article. The three nonguaranteed elements of the fixed index annuity in question in that litigation were index credits, the MVA, and the bonus on first year premiums.

Eller affirmed the lower court’s summary judgement decision in favor of the insurer and held that the premium bonus was not fraudulent. The court said “We begin from the settled premise that a seller generally has no duty to disclose internal pricing policies or its method for valuing what it sells.” The insurance company had no duty to disclose, according to the Ninth Circuit Court of Appeals, that an annuity with a bonus feature might have lower index credits than alternative products.

This raised a question for me about the September 2014 bulletin from the Iowa Insurance Division in which Commissioner Gerhart says, “The use of ‘uncapped’ terminology without additional disclosures of limitations is misleading. Consumers should be informed how the limitations of the ‘uncapped’ strategy lower future projected interest credits.” This appears to be an indication that Iowa regulators see the burden to disclose internal pricing somewhat differently than did the court in Eller. It is likely that other regulators do too. The court stated, “[Plaintiff] does not allege that EquiTrust was a fiduciary or that some statute required the disclosure of its internal pricing policies.” One of the open questions in my mind is whether the 2014 Iowa Bulletin would change that determination.

Before attending the session at ACLI, I was very interested in the significance of the Iowa Bulletin, and after attending, I am even more so.

ACLI Legal and Compliance Section Annual Meeting

Three of us from Currin Compliance Services, Inc. are heading to Las Vegas this week for the ACLI Legal and Compliance Section Annual Meeting. Last year I had planned to attend and then had last minute client needs that kept me away, though Sarah Huffer attended in my place and represented us very well! I am really looking forward to being back as this is one of my favorite conferences of the year where I get to see more of my attorney friends compared to other compliance conferences. I am also excited to share this meeting with one of our new Minnesota-based employees, Maureen James.

Check our blog frequently for feedback on the conference and also check out our very good friend Alan Prochoroff’s publication, Insurance Compliance Insight at, for his coverage on IRES’s Career Development Seminar being held in Charleston, SC.