CARFRA Gets Its First Product Filing

Once a new CSO Table is adopted by the NAIC and becomes law in the states, the system will see many more filings because there will be product refilings, he added.

In addition to the term life, individual flexible deferred annuities and Medicare supplement policies that the system is currently ready to accept, Koken said the possibility of using it for credit, long-term care, universal life, and group products has also been raised.

Fitzgerald noted that the launch period, which will run from six to nine months and should take the working group into the start of 2002, is a "learning experience" that will help regulators determine the products and methods that work best in the system.

In order to determine how the system can best evolve, Koken said an eight-member evaluation committee will be formed with four regulators (including three from CARFRA test states), three industry representatives and one consumer representative.

Earlier in the meeting, Illinois Representative Terry Parke, president of the National Conference of Insurance Legislators, Albany, N.Y., expressed concern that "fundamental" problems with CARFRA could exist.

Parke said NCOIL was observing CARFRA's development, but noted concerns such as the fact that participation in the program is voluntary and states can retain their own authority.

Parke said it might be time to find more decisive ways to reach the same goal and create an authority that has absolute authority, takes that authority from state governments, is totally free-standing but is also state-based and state-funded.

Parke told attendees at the NAIC meeting that an interstate compact could be the answer. He added that a dual chartering alternative would be unacceptable.

The American Council of Life Insurers in Washington is examining one option that would focus on a process such as the system used for securities filings with the NAIC's Securities Valuation Office, according to Patricia Parachini, senior legislative director. The emphasis would be on process and not an organization or body, according to Parachini.

One possible direction, said Bruce Ferguson, deputy vice president of state relations with ACLI, would be to create an entity (similar to the National Producer Licensing Registry) that commissioners would authorize to develop standards that would make CARFRA work.

Parachini said ACLI has been in contact with the 10 CARFRA test states requesting they review any deviations from CARFRA standards. Some states have identified deviations ACLI does not believe are necessarily deviations, she said.

It is important, she said, for states to identify whether deviations from the CARFRA standards are statutes, regulations or practices such as 'desk drawer rules.'

Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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