LISA President, Darwin Bayston, Director of Legislative & Regulatory Affairs, Michael Kreiter, and Coventry’s Michael Freedman together represented LISA and its members at the Fall Meeting of the National Conference of Insurance Legislators (NCOIL) last week in Point Clear, Alabama. LISA was invited to speak to legislators from across the nation on the life insurers’ anti-consumer and anti-competitive conduct against life settlements.
LISA represented the market well by presenting legislators with specific facts that demonstrate how insurers are interfering with consumers’ access to information and assistance with life settlements and how some companies are impairing life settlement transactions, including violations of law. LISA’s detailed presentation specifically addressed the following the anti-consumer activities by life insurers:
- Failure of life companies to pay interest on death claims despite statutory and contractual obligations;
- Unauthorized changes to ownership data by insurers;
- Insurers asking illegal questions about life settlements on life insurance applications;
- Threats to producers and gagging producers related to advising and assisting policyowners with life settlements, including term conversions;
- Obstruction by insurers in obtaining verification of coverage and other information related to life settlements or life settled policies.
LISA’s presentation to NCOIL is available HERE.
Before LISA spoke, the American Council of Life Insurers (ACLI) submitted a letter on these issues and testified by summarizing that letter. Neither the letter nor testimony addressed the specific issues raised by LISA, but rather deflected any criticism of the life companies’ conduct. The letter accused the life settlement industry of not being willing to engage in discussions with the ACLI and asserted that the industry’s presentation of issues was merely an attempt to “discredit life insurers.” In the ACLI’s testimony, however, they did reiterate an interest in coming together to address the issues in a manner that would recognize the responsibilities each has to its consumer and client constituents. The ACLI’s letter to NCOIL is attached HERE.
LISA’s presentation was well received. Several legislators, and at least one regulator in attendance, were very interested to know more about the problem of insurers not paying required interest due on death claims. As many of you know, most of the largest life companies have paid out billions of dollars in penalties and claims in just the past few months to resolve allegations that carriers were selectively using the Social Security Administration’s Death Master File database to end benefits on annuitants but did not use it to find deceased policyholders or their beneficiaries. There have also been recent efforts by regulators to investigate small and mid-sized companies for unpaid benefits. The unpaid interest on death benefits could reopen the entire issue and could be worth billions of dollars to beneficiaries.
LISA leadership will once again reach out to the ACLI and its members to discuss these and other issues of mutual interest and concern. There are significant benefits to the life insurance and life settlement industries working together towards an environment where consumers’ life insurance needs are met with trust and confidence, and includes an open, free and competitive market for them to exercise options available when policies no longer are needed, wanted or affordable.
While we do not particularly relish continued battles with the life industry, LISA will remain active, vocal and vigilant in protecting our market and the consumers we serve. The state laws that we worked so hard to enact are there to protect consumers and our market and we will now seek to have those laws enforced against life insurers who violate them.
In addition to providing testimony such as we did at NCOIL, we will be providing regulators and legislators with more detailed information on several of the issues raised in the coming weeks. Also LISA will be filing formal complaints with regulators against insurers – a course of action the ACLI specifically encouraged in their testimony – over such issues as unpaid interest, illegal questions on applications, interfering with term conversions and other illegal conduct by insurers.
We appreciate the continued support of our members. Feel free to post your feedback, comments and ideas here.