Issuers Await Uniform State Standards
May 17, 2004
It's going to be a lot easier to bring products to market in the near future. Or is it?
The Interstate Compact National Standards Working Group of the National Association of Insurance Commissioners (NAIC) is expected to adopt national standards for registration of variable annuities and term life insurance. However, although Colorado, Iowa, Utah, Virginia and West Virginia adopted the standards earlier this month, they are not expected to take effect until 2008.
"A big part of our ongoing endeavors to provide the highest level of consumer protection and service is bringing quality insurance products to the national marketplace in a timely and efficient manner," said Alabama Insurance Commissioner Walter Bell.
Mike DeGeorge, chief council of the National Association of Variable Annuities in Reston, Va., said NAVA is "in favor of the NAIC approach that provides uniform standards to all 50 states and D.C. "It will make filing more efficient."
The uniform standards, DeGeorge added, will dramatically help variable annuity issuers bring products to market in states like California, where product registration has historically been time consuming and cumbersome.
Hugh McHaffie, SVP, individual business product management with MetLife of New York, said that insurance companies will benefit from the speed-to-market initiative. Today, it takes about six months to introduce a product in all 50 states and the District of Columbia. With the new rules, it should take just two months.
"It's important to get a competitive product out quickly because a product life cycle is short," McHaffie said.
In the meanwhile, because it will take several years before the nationwide standards are a reality, some states already have adopted uniform filing procedures. New York has a two-month expedited filing process. California, Texas and Florida, where 26% of all annuities are sold, have similar time-compression programs. Beginning in the first quarter of this year, insurance companies in those states can begin selling products within 60 days.
The hiatus between the acceptance of the interstate compact by the NAIC and national implementation, however, could cause problems. Some annuity executives don't think all the states will go along with the NAIC interstate compact but might jump on the Florida-Texas-California bandwagon instead.
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