Things are happening involving insurance regulations nationwide, and our San Francisco insurance attorneys are watching the latest developments. This week the Wall Street Journal reported that California Insurance Commissioner,Dave Jones, has told other state regulators that he will not vote for proposed changes to life insurance regulations. The changes involve the National Association of Insurance Commissioners, which is an organization of state officials that set standards for adoption by the states.
The proposed changes, pushed for by insurance companies, would get rid of the current system, which uses life insurance industry-wide formulas to decide how much money needs to be set aside for the payouts they guarantee to their customers. The insurance companies wish to use their own internal formulas instead of industry standards to decide how much money is needed, using their own particular data on the types of customers and policies they have.
Commissioner Jones points out, in his statement against this proposed change, that there is no identification or quantification of the additional resources state agencies would need, even though the new models are highly complex. He made the valid argument that, “if we should have learned anything from the last financial crisis, trusting a financial industry to monitor itself can only be effective [if] that trust can be verified.”
Top regulators in New York, the state with the second largest life insurance industry by premium volume after California, have also expressed great concern over the proposed changes. Benjamin Lawsky, the superintendent of New York’s Department of Financial Services, stated he was concerned with insurance companies not reserving enough funds to cover their obligations, which would hurt insurance consumers and might lead to an insurance company’s insolvency.
California and New York officials are fighting a battle against the insurance industry, which has been pushing this change for years. The insurance companies claim that a “one size fits all” approach is counterproductive and leads to more cash reserves than necessary for most common life insurance products, the two most popular being term life insurance and universal life insurance. Some state officials agree with the companies, including Iowa’s Insurance Commissioner, Susan Voss. She told reporters that Commissioner Jones’ concerns would be addressed at the next meeting of NAIC, but she expected the procedural changes to move forward.
San Francisco Insurance Attorneys
Whether the changes pass and go into effect or not, insurance companies are for-profit organizations, so profits often matter more than the individual consumer’s needs. These latest measures are another way for insurance companies to maximize their profits at a risk to their customers. Regardless, these companies must follow the law and cannot cheat their customers out of benefits paid for and deserved.
The Brod Firm’s San Francisco insurance attorneys are experienced at helping clients deal with all kinds of problems with insurance companies. If you are having an insurance problem and feel like your insurance company is denying you the benefits you deserve and paid for, contact an insurance law attorney in your area today.