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Life Insurance/Annuity Sales in 2009

Darla Mercado reports in today’s edition of Investment News that while fixed annuity sales fell for 2009, down 2% from 2008 sales, indexed annuities did better— up $3.5 billion year-over-year. [ Fixed annuity sales slid in ‘09]. Based on Ms. Mercado’s reporting, fixed annuities in several distribution channels and designs (book value vs. MVA) fared poorly, due to low interest rates, according to Scott Stathis of Kehrer-LIMRA. Variable annuities are only discussed in the bank channel, where she reports that in November sales were down .1 billion from other monthly sales figures in 2009, while they rebounded a bit in December to be .1 billion higher than those previous months. Mr. Stathis reportedly attributes the somewhat depressed sales of variable annuities to higher fees and decreased benefits.

Meanwhile on the life insurance front, the [MIB reported late last week] that U.S. application activity for individually underwritten life insurance increased 1.2% in January year-over-year. The MIB states that January 2010 represents the sixth consecutive month where year-over-year change is positive for the U.S. Life Index, and they report that as being the longest sustained trend of U.S. increases on record. Application activity for the period December 2009 to January 2010 remained virtually flat.

From where I sit, I look at the future and not the past. From here, I see a lot of product development with some significant innovation being discussed. It would not surprise me at all if this year sees a large increase in product filings and new products coming to market. My evidence is far less scientific than was reported above, but I like what I see; people I know who were laid off are finding jobs and product development seems to be churning. I like to know what the research says about past sales, but when I think about what the future holds, I have learned to trust my desk. And 2010 is shaping up as a busy year!

NY Illustration Annual Certifications

Happy New Year!

With the new year upon us, many insurers are working on annual filings. Some companies may have done their annual illustration filings for 1/1/2010, but if your company uses a later date in the year for NY, be sure to consult the [guidance] issued by the NYSID last fall on this topic.

Of particular note is the section titled How Should Policy Forms be Listed? This will come as a surprise to many, I believe. The Department states: “Many certifications only contain lists of policy forms that are currently being issued; however, the certification also pertains to illustrations for existing policies on forms no longer being issued.” They emphasize that the list must include all forms for which in-force illustrations subject to the regulation could have been made. The guidance says that the list should distinguish between forms currently being issued and those no longer issued. Note also that all riders “involved” in illustrations must be listed in the annual certification as well as the base policy form.

While guidance setting out best practices and recommendations for clean submissions are always appreciated, this seems to be a new interpretation of this long-standing requirement. Nonetheless, the guidance does indicate that this is one of the Department’s “expectations” and it seems likely that those companies submitting lists formatted in ways that have been accepted previously may find they are not accepted this time around.

For those submitting via SERFF, the filing guidance is quite helpful: TOI “Life Insurance & Annuity Products” Sub-TOI “General” and filing type “Life Annual Illustration Certification.”