IIPRC Updates

Connecticut Joins!

The Interstate Insurance Product Regulation Commission (IIPRC) had some impressive news in their June 13th press release. Not only are they celebrating 10 years since their inaugural meeting, they welcomed the 45th state to join the Commission - Connecticut! We have some time to plan to add CT to our IIPRC filings though; their law doesn’t go into effect until July 1, 2017. Per the IIPRC’s Operating Procedures, Connecticut has until such date to opt out of any specific standards, so we will be on the lookout for news on that front.

2017 CSO Mortality Table Updates

The IIPRC released Filing Information Notice (FIN) 2016-1 in April, describing the steps an insurer can take to file new products or amending previously approved products to reflect the 2017 CSO table. The IIPRC cannot be used to update policies to the 2017 CSO table that were originally filed with the states individually. It can only be used for policies previously approved by the IIPRC. Updates to IIPRC approved policies can be made via replacement pages, updated specification pages or statements of variability and/or an endorsement. The FIN is full of detailed information outlining exactly how to make this change.

Updates to Individual Annuity MVA Standards

After going through their 5-year review, the MVA Standards have been updated, effective July 18, 2016. The most notable change is a revision to Appendix B of such Standard. In the previous version, many contracts with an MVA were limited to a 7% maximum surrender charge schedule in year 1, decreasing by 1% each year. This requirement has been removed in the updated standards. 

In the News: Karen Schutter in Bloomberg Businessweek

The “bottom line” in the Bloomberg piece, California Decides to Go It Alone on Taxes, is “A California decision to weaken an interstate tax agreement may put similar compacts between states at risk.” The article, appearing in the February 1-February 7, 2016 edition of the print magazine, is reporting the December 31, 2015 decision of the California Supreme Court weakening “one of the most important interstate compacts,” the Multistate Tax Compact. 

As indicated by the regular “bottom line” feature of this publication, the implication is that other interstate compacts could face a similar fate. However, Bloomberg spoke to our own industry colleague, Karen Schutter about the IIPRC and says:  “The Interstate Insurance Product Regulation Compact, for instance, is clearly written as a binding legal contract, so the California Supreme Court’s decision is irrelevant to it, argues Karen Schutter, Executive Director of the Washington-based commission that oversees the insurance accord.” 

We agree and believe the IIPRC is solid and binding. However, the article ended with a bit of possible disagreement: “For now, the only compacts that everyone agrees are safe from challenge are the ones to which Congress has explicitly given consent—for example, those covering nuclear waste disposal, oil and gas, and water rights. Congressionally approved compacts have the force of federal law, which trumps state law. One solution, then, to the problem of weak interstate agreements like MTC would seem to be for states to ask Congress to put its stamp of approval on all interstate compacts. Falling back on Washington might injure their pride, but it would keep legal uncertainty from gumming up the works.” Of course, Ms. Schutter’s point is that the IIPRC is not weak like the MTC.  It is legally and operationally strong and needs no additional action to be safe from challenge.