LIFE INSURANCE AND ANNUITIES (A) COMMITTEE...Lamy (NH); Bogdanka Kurahovic (NM); Elizabeth Kelleher Dwyer, Matt Gendron and Sarah Neil (RI); Mike Boerner (TX); Tomasz Serbinowski (UT);

© 2019 National Association of Insurance Commissioners 1

Date: 7/31/19

2019 Summer National Meeting New York, New York

LIFE INSURANCE AND ANNUITIES (A) COMMITTEE

Sunday, August 4, 2019 2:00 – 3:30 p.m.

New York Hilton Midtown—Trianon Ballroom—3rd Level

ROLL CALL

Doug Ommen, Chair Iowa Barbara D. Richardson Nevada Stephen C. Taylor, Vice Chair District of Columbia Linda A. Lacewell New York Jim L. Ridling Alabama Jon Godfread North Dakota Keith Schraad Arizona Jillian Froment Ohio Trinidad Navarro Delaware Javier Rivera Rios Puerto Rico Dean L. Cameron Idaho Carter Lawrence Tennessee James J. Donelon Louisiana Mark Afable Wisconsin Bruce R. Ramge Nebraska NAIC Support Staff: Jennifer R. Cook/Jolie H. Matthews

AGENDA

1. Consider Adoption of its July 10 Minutes—Commissioner Doug Ommen (IA) 2. Consider Adoption of its Task Force and Working Group Reports—Commissioner Doug Ommen (IA)

a. Annuity Disclosure (A) Working Group—Mike Yanacheak (IA) b. Annuity Suitability (A) Working Group—Director Jillian Froment (OH) c. Life Insurance Illustration Issues (A) Working Group—Richard Wicka (WI) d. Life Insurance Online Guide (A) Working Group—Mary Mealer (MO) e. Life Actuarial (A) Task Force—Mike Boerner (TX)

3. Discuss its Charge to “Explore Ways to Promote Retirement Security Consistent

with the NAIC’s Continuing ‘Retirement Security Initiative’”—Commissioner Stephen C. Taylor (DC) a. Discuss a New Working Group and Work Plan—Commissioner Stephen C. Taylor (DC) b. Hear a Presentation from the Insured Retirement Institute (IRI)—Jason Berkowitz

4. Discuss Referral from the Big Data (EX) Working Group—Commissioner Doug Ommen (IA) 5. Discuss Any Other Matters Brought Before the Committee—Commissioner Doug Ommen (IA) 6. Adjournment W:\National Meetings\2019\Summer\Agenda\A Cmte.docx

Attachment One Life Insurance and Annuities (A) Committee

8/4/19


Draft: 7/30/19

Life Insurance and Annuities (A) Committee Conference Call

July 10, 2019

The Life Insurance and Annuities (A) Committee met via conference call July 10, 2019. The following Committee members participated: Doug Ommen, Chair, Lindsay Bates and Mike Yanacheak (IA); Stephen C. Taylor, Vice Chair, and Philip Barlow (DC); Jim L. Ridling (AL); Keith Schraad represented by Vincent Gosz (AZ); Dean L. Cameron (ID); Bruce R. Ramge represented by Matt Holman (NE); Barbara D. Richardson (NV); Linda A. Lacewell represented by Bill Carmello and James Regalbuto (NY); Jillian Froment and Peter Weber (OH); Carter Lawrence represented by Brian Hoffmeister and Michael Humphreys (TN); and Mark Afable, Jerry DeArmond and Eric Holz (WI). Also participating were: Rachel Hemphill and Perry Kupferman (CA); David Altmaier and Chris Struk (FL); Julie Holmes (KS); Fred Andersen (MN); Mary Mealer (MO); Denise Lamy (NH); Bogdanka Kurahovic (NM); Elizabeth Kelleher Dwyer, Matt Gendron and Sarah Neil (RI); Mike Boerner (TX); Tomasz Serbinowski (UT); and David Hippen (WA). 1. Adopted its Spring National Meeting Minutes Director Froment made a motion, seconded by Commissioner Afable, to adopt the Committee’s April 7 minutes (see NAIC Proceedings – Spring 2019, Life Insurance and Annuities (A) Committee). The motion passed unanimously. 2. Adopted Valuation Manual Amendments Commissioner Ommen explained that there are 65 separate Valuation Manual amendments for consideration by the Committee representing the significant work of several subgroups under the Life Actuarial (A) Task Force. Mr. Boerner gave a brief overview of the summary of the amendments. He explained that several of the amendments provide the reserve details for the Variable Annuities Framework. He said many other amendments come out of the Valuation Analysis (E) Working Group analysis of principle-based reserving (PBR) reports and improve the reporting and clarity of PBR requirements in the Valuation Manual. Another significant portion of the amendments helps prepare the Valuation Manual for 2020, which is the required start of PBR for companies that have not yet elected to implement PBR. He said that will be approximately 270 companies compared to the 30 that have implemented so far. Ms. Ahrens said Nebraska, while supportive of the package of amendments, did raise concerns during deliberations with the Life Actuarial (A) Task Force. She said Nebraska considers one amendment in the package to be a non-PBR interim solution. She said that as PBR goes forward, it needs to be responsive to innovation and the ongoing competitiveness of the insurance environment, which can stimulate availability of products, as well as fair and reasonable pricing to the insureds. She said Nebraska prefers PBR solutions in the Valuation Manual, but to the extent that amendments are adopted that provide a more conservative temporary solution, they need to be addressed going forward to ensure that a long-term solution is developed in the spirt of PBR. Mr. Carmello said New York also voted against one of amendments at the Task Force level because it prefers a more conservative approach, which New York will likely take. However, he confirmed that New York will vote in favor of the package as a whole. Commissioner Ridling made a motion, seconded by Director Froment, to adopt the Valuation Manual amendments (see NAIC Proceedings – Summer 2019, Executive and Plenary Committee – Attachment ?). The motion passed unanimously. 3. Adopted an Amendment to AG 43 Mr. Boerner said this amendment to Actuarial Guideline XLIII—CARVM for Variable Annuities (AG 43) applies to the Variable Annuities Framework reserve requirements to products issued prior to Jan. 1, 2017. He said the Valuation Manual amendments just adopted by the Committee handle the reserve requirements for the Variable Annuities Framework for products issued on and after Jan. 1, 2017. This amendment will synchronize the reserve requirements with in-force business. Mr. Holman made a motion, seconded by Commissioner Ridling, to adopt the amendment to AG 43. Alabama, Arizona, the District of Columbia, Idaho, Nebraska, Ohio, Tennessee and Wisconsin voted in favor of the motion. New York opposed the motion. The motion passed.

Attachment One Life Insurance and Annuities (A) Committee

8/4/19


4. Discussed Upcoming Life Actuarial (A) Task Force Issues Mr. Boerner apprised the Committee of two additional items. He said there is another actuarial guideline that the Life Actuarial (A) Task Force will be considering at the Summer National Meeting related to the Variable Annuities Framework for both reserves and capital. He said the amendment informs companies of the existing option to adopt the variable annuity reserve and capital requirements early for year-end 2019. This amendment will be coming to the Life Insurance and Annuities (A) Committee after the Summer National Meeting. Mr. Boerner also said that the Life Actuarial (A) Task Force will be submitting a request to the Statutory Accounting Principles (E) Working Group to work with the Task Force to coordinate efforts to determine what revisions to reserving and accounting requirements might be necessary to address the yearly renewable term (YRT) reinsurance reserve credit issue for which Valuation Manual amendment proposal 2019-39 provides an interim solution. Mr. Boerner said he will update the Committee on this issue at the Summer National Meeting. Having no further business, the Life Insurance and Annuities (A) Committee adjourned. W:\National Meetings\2019\Summer\Cmte\A\A Cmte 7- 10-19 ConfCallmin final.docx


Conference Call

ANNUITY DISCLOSURE (A) WORKING GROUP July 29, 2019 / July 15, 2019 / June 5, 2019 / May 13, 2019

Summary Report

The Annuity Disclosure (A) Working Group met via conference call July 29, 2019; July 15, 2019; June 5, 2019; and May 13, 2019. During these meetings, the Working Group: 1. Reviewed and discussed comments on several iterations of draft revisions to the Annuity Disclosure Model Regulation

(#245). 2. Identified five outstanding issues requiring a choice between language contained in the July 9 draft or language in the July

15 draft. 3. Voted on four of the five outstanding issues and was able to reach a resolution on three of the issues during its July 29

conference call. W:\National Meetings\2018\Summer\Cmte\A\ADWG\AnnuityDisclosureWGsumdfinal.docx


Conference Call

LIFE INSURANCE ONLINE GUIDE (A) WORKING GROUP July 24, 2019 / July 8, 2019 / June 10, 2019

Summary Report

The Life Insurance Online Guide (A) Working Group met via conference call July 24, 2019; July 8, 2019; and June 10, 2019. During these meetings, the Working Group: 1. Made progress on its charge to “develop an online resource on life insurance, including the evaluation of existing content

on the NAIC website, to be published digitally for the benefit of the public.” 2. Heard a presentation from the NAIC Communications Director about future plans to streamline and update the NAIC

website, the opportunity to coordinate with the Working Group, and its work. 3. Discussed draft language submitted by state insurance regulator and industry volunteers and reviewed revision

suggestions provided by NAIC-funded consumer representatives. 4. Planned to continue discussions via conference call following the Summer National Meeting. W:\National Meetings\2019\Summer\Cmte\A\Life Ins. Online Guide WG\LIOGWGsum final.docx


Conference Call

LIFE INSURANCE ILLUSTRATION ISSUES (A) WORKING GROUP July 30, 2019 / May 15, 2019

Summary Report

The Life Insurance Illustration Issues (A) Working Group met via conference call July 30, 2019, and May 15, 2019. During these meetings, the Working Group: 1. Continued making progress in the development of a one to two-page consumer-oriented policy overview document in

order to achieve its charge of improving the understandability of the life insurance policy summaries already required in Section 7B of the Life Insurance Illustrations Model Regulation (#582) and Section 5A(2) of the Life Insurance Disclosure Model Regulation (#580).

2. Continued to discuss how to revise Model #580 to include a policy overview document to accompany all life insurance

policies along with the Life Insurance Buyer’s Guide, as well as sample policy overview documents. 3. Discussed April 24 draft revisions and released May 20 draft revisions for comment during its May 15 conference call. 4. Discussed comments on the May 20 draft revisions, and voted to decide threshold issues to move the discussions forward

during its July 30 conference call. 5. Planned to meet via conference call Sept. 3 to continue its work. W:\National Meetings\2019\Spring\Cmte\A\LIIIWG\LIIIWG summary report final.docx

OCTOBER 2018INSURED RETIREMENT INSTITUTE

2ND BIENNIAL STUDY ON THE AMERICAN

RETIREMENT EXPERIENCE

RETIREMENT, INCOME, AND RISK

2Insured Retirement Institute

The Insured Retirement Institute (IRI) is the leading association for the

retirement income industry. IRI proudly leads a national consumer coalition

of more than 30 organizations, and is the only association that represents the

entire supply chain of insured retirement strategies. IRI members are the major

insurers, asset managers, broker-dealers/distributors, and 150,000 financial

professionals. As a not-for-profit organization, IRI provides an objective

forum for communication and education, and advocates for the sustainable

retirement solutions Americans need to help achieve a secure and dignified

retirement. Learn more at www.irionline.org.

©2018 IRI

All rights reserved. No part of this report may be reprinted or reproduced in

any form or used for any purpose other than educational without the express

written consent of IRI.

In September 2016, IRI published “It’s All About the Income,” the first

in a research series on Americans age 65 to 85, who have been retired

between five and 15 years and had at least $100,000 in investable

assets when they retired.

The goal of the series is to examine the retirement experience of those

individuals who have been living in retirement for a meaningful amount

of time, and develop a deeper understanding of the underpinnings of

their retirement security: the risks they have encountered, are worried

about, and may face; how well they have prepared, and where their

preparations are weak; and finally, how their experience can help guide

the preparations of future generations of retirees. As reported in the

2016 inaugural study, pension income is a significant component of

retirees’ financial and overall security – in 2018 this continues to be

true, with important implications for current and future generations of

active and retired American workers. This year’s report will look at how

guaranteed income, be it Social Security, pension, or annuities, is the

rebar that strengthens the road to and through retirement.

ABOUT THE INSURED RETIREMENT INSTITUTE:

INTRODUCTION

1 Retirement, Income, and Risk

FIVE THINGS TO KNOW ABOUT RETIREES

WHAT THIS REPORT COVERS

64%

25%

64% of retirees receive

25% or more of their

income from an employer

pension

Eight in 10 retirees receiving lifetime

income from an annuity are very or

somewhat satisfied with their annuity.

Only 16 percent of

retirees count on

Social Security for

50 percent or more

of their income

More than six in 10

retirees work with a

financial advisor

8 in 10

6 in 1016%

This report provides a variety of useful and informative findings regarding the experience of

today’s retirees in America. Here are five of the most important, critical to understanding the

retirement landscape today, and to imagining and preparing for the retirement of tomorrow.

CONCLUSION

– Lessons for

Future Retirees

ONLY 25% OF RETIREES believes they are likely

to need long-term care, versus a probability of 68% of

needing care for those age 65 and older

SOURCES OF INCOME

– where do

retirees get

their money?

RETIREMENT PREPARATION & EXPECTATIONS

– how well did

today’s retirees

prepare for

retirement?

LIVING IN RETIREMENT

– how are

retirees’ plans

holding up?

RETIREMENT CHALLENGES –

to what extent

are retirees aware

of, and protected

against, retirement

risks?


REPORT AND EXHIBITS

7%

30%

28%

35% Lessthan$50,000

Between$50,000and$75,000

Between$75,000and $100,000

$100,000ormore

Figure 1: Total Retirement Income

SOURCES OF INCOME

More than nine in 10 retirees are collecting Social Security benefits. Of those

who are not, about half are eligible but have not yet filed. Of the 81 percent

who are married or living with a domestic partner, 84 percent say their

spouses are also collecting Social Security. In 2018, the average married

couple receiving Social Security benefits receives $28,080 per year.1 Figure 1 shows most retirees receiving substantially more income than the average

Social Security benefit, with more than one-third claiming total household

annual income of $100,000 or more.


Figure 2 further shows that relatively few retirees have taken a

significant “pay cut” since retiring; more than four in 10 say their

income is either the same or has increased, while about one-third

have seen a 25 percent reduction in income. Only 21 percent have

seen their income decrease by one-half or more.

With only 7 percent of retirees receiving less than $50,000 in annual

household income, and the majority with annual income at or near

pre-retirement levels, clearly most retirees are tapping other sources

of income to supplement their Social Security benefits. Further, 58

percent filed for Social Security prior to age 65, with only 10 percent

having filed at age 67 or later. One-third of retirees filed between

ages 65 and 69; the older among this group may have filed at full

retirement age, but very few current retirees have maximized their

benefits by waiting until age 70 to begin receiving payments.

27%

32%

17%

4%

16%

3%

0% 5% 10% 15% 20% 25% 30% 35%

Aboutthesame

About25%lower

About50%lower

75%lower,ormore

Highernow

Notsure

Figure 2: Retirement Income versus Pre-Retirement Income

More than 9 in

10 retirees have

annual income of

$50,000 or more

9 in 10


6%

39% 39%

13%

3%

19% 17%

24% 25%

15%

61%

28%

6%3% 2%

73%

18%

5% 3% 1%0%

10%

20%

30%

40%

50%

60%

70%

80%

None 1%to24% 25%to49% 50%to74% 75%ormore

SocialSecurity Pension SWiP Employment

Figure 3: Income Sources as a Percentage of Total Household Income

Figure 3 shows that while Social Security is indeed a cornerstone of

retirement, almost half of retirees say it accounts for less than 25%

of their household income, and only 16 percent say it accounts for 50

percent or more. However, the instance of pension income among current

retirees is striking – 81 percent receive at least some income from a

pension, 64 percent depend on a pension for at least 25 percent of their

income, and 40 percent for 50% or more of their retirement income.

Income from a Systematic Withdrawal Plan (SWiP) is much less common

than either Social Security or pension income, with almost six in 10 not

taking regular income from retirement savings in an IRA, 401(k), or other

investments. And full- or part-time employment plays only a minor role

for most, with 73 percent receiving no income from employment and

only 4 percent saying employment accounts for 50 percent or more. It

is important to note that this is not broadly an indication of employment

being desired but not found – of those retirees not receiving any income

from employment, only 15 percent have ever looked for paying work since

retiring from a full-time occupation.

Social Security is

less than 25% of

income for more

than one-half of

retirees

25%


18%

39%

24%

15%

4%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

None

Systema5c

Irregular

Both

Other

Figure 4: Withdrawal Frequency

10%

28%

54%

8%

Interest/Dividends

SetPercentage

RMD

Notsure10%

28%

54%

8%

Interest/Dividends

SetPercentage

RMD

Notsure

Figure 5: Types of Systematic Withdrawals

Eight in 10 retirees had a balance in a defined contribution (DC) plan when they retired, and 58 percent of those

with DC plans transferred their balance to an IRA account when they retired. About 70 percent of retirees have

taken withdrawals. Figure 4 breaks down withdrawals by frequency.

More than one-half of retirees who retired with a

defined contribution plan are either solely taking

systematic withdrawals from their balances in those

plans (39 percent) or are taking both systematic

withdrawals and taking other withdrawals, with

true systematic withdrawals coming primarily from

the IRAs those balances were rolled into, as most

DC plans do not offer SWiPs. Two-thirds of those

taking some type of withdrawals did not begin taking

those withdrawals until some time after they retired,

rather than starting immediately upon retirement. An

interesting finding is that only 27 percent of retirees

are taking withdrawals based on a written retirement

plan. The lack of a formal plan may be a factor in the

timing of withdrawals, but as Figure 5 shows, the

most common reason for “systematic” withdrawals

is the need to satisfy the Required Minimum

Distribution (RMD) rule – since this represents the

calculation of a specific amount each year, they

are part of total income, but may be reinvested in

non-qualified plans if not needed to meet expenses.

While respondents classified such withdrawals as

“systematic,” they are of course distinctly different

from a SWiP and would be able to be taken directly

from a DC plan.


Since the bulk of systematic withdrawals

are taken to satisfy RMD requirements,

it should be expected that withdrawal

percentages would be varied, given a

range of ages and therefore a range of

RMD calculations, which are based on

life expectancy. Figure 6 shows this is

exactly what is observed in the survey

data, with most annual withdrawals at

6 percent or less, but a few at higher

percentages.

15%

24%

27%

6%

7%

4%

17%

0% 5% 10% 15% 20% 25% 30%

Lessthan1%

1%to3%

4%to6%

7%to8%

9%to10%

Morethan10%

Don'tknow

Figure 6: Systematic Withdrawal Percentages

Six in 10 retirees

taking “systematic”

withdrawals from

savings withdraw 6%

annually, or less

6 in 10


Also supporting the notion that

withdrawals are more forced than

planned, most retirees report that

their withdrawals are either in

accordance with their expectations

or are less than they expected.

Figure 7 shows how this breaks

down.

Finally, when it comes to income

retirees are not currently

depending on annuities in great

measure. Figure 8 shows that while

one-third own an annuity, only

15 percent say they are receiving

lifetime income payments. While

this is unsurprising given that

most current retirees have pension

income to supplement Social

Security, future generations of

retirees are far less likely to have

pensions: only 17 percent of

American Workers are covered by

a defined benefit pension plan.2

21%

59%

20%

Lessthanexpected

Asexpected

Morethanexpected

Figure 7: Actual Versus Expected Withdrawals from Retirement Savings

Figure 8: Annuities - Ownership and Income

15%

18%

67%

OwnanAnnuity-Life1meIncome

OwnanAnnuity-NoIncome

DoNotOwnanAnnuity

15%

18%

67%

OwnanAnnuity-Life1meIncome

OwnanAnnuity-NoIncome

DoNotOwnanAnnuity


Figure 9 shows that one-half of retirees who had at least

$100,000 saved at the point of retirement also had less than

$500,000 in retirement savings, with about one in four retiring

with less than $250,000. Interestingly, both the lowest and

highest response categories increased a combined 10 percent,

while the three middle savings ranges dropped a total of 10

percent. Individual retirement experiences are of course highly

variable, with everything from investment returns to medical

expenses potentially contributing to the growth or reduction

of retirement savings. However, it is encouraging to see a bit

more shift into the $1 million plus category than into the under

$100,000 group. It is very likely pension income is playing an

important role in helping retirees preserve their investable

assets. Future generations, such as the baby boomers, are

less likely to have pensions and less likely to have substantial

retirement savings; for example, only four in 10 Boomers with

savings have saved at least $250,000.3

Social Security, pension income, and retirement savings. With most having a

measure of financial security as a backdrop, how did they want to experience

retirement at the point of retirement, and how has that changed since they

retired? Figure 10 reflects responses when retirees were asked to select the three

most important things they wanted to experience at the point they retired, and

the three things that are most important to them now. While most of the shifts in

importance are relatively small, remaining active and spending time with family

become significantly more important as they spend several years in retirement.

0%

27%

29%

24%

20%

4%

25%

24%

21%

26%

0% 5% 10% 15% 20% 25% 30% 35%

Lessthan$100,000

$100,000to$249,000

$250,000to$499,999

$500,000to$999,999

$1Million+

AtReDrement Today

Figure 9: Savings at Point of Retirement Versus Today

MANAGING AND OPTIMIZING RETIREMENT SAVINGS

Retirees seem to be well covered

regarding income. The absence of a

widespread need to supplement income

with systematic withdrawals or annuities

indicates that most are finding that

the combination of Social Security and

pension income is enough to cover their

expenses. This section will examine

their preparedness for retirement, and

how well situated they are to withstand

expense shocks during retirement.


IRI research consistently shows

a correlation between retirement

preparedness and having a relationship

with a financial advisor. For example,

79 percent of baby boomers with a

financial advisor have at least $100,000

saved for retirement, versus only 48

percent of those who do not work

with an advisor.4 Figure 11 examines

the prevalence of advisor relationships

among retirees, showing that 72 percent

of retirees who retired with at least

$100,000 in investable assets either

have or had a financial advisor, and 63

percent currently maintain a relationship

with one. Very few, only 9 percent,

had a financial advisor before retiring

but chose not to use the services of an

advisor during retirement, indicating

that the relationship continues to

provide value after retirement.

50%

13%

9%

28%

Currentlyandpriortore>ring

Sincere>ringbutnotprior

Beforere>ringbutnotnow

Neverhadanadvisor

Figure 11: Incidence and Tenure of Financial Advisor Relationship

53%

51%

46%

34%

32%

25%

11%

9%

63%

47%

55%

29%

26%

18%13%

14%

7%

0% 10% 20% 30% 40% 50% 60% 70%

Remainingac5ve

Adventure

Timewithfamily

Avoidingstress

Timetooneself

Hobbies/interests

Noalarmclock

Societalcontribu5on

Sociallife

Full/Part-5meemployment

AtRe5rement Today

26%26%

15%

Figure 10: Top 3 Retirement Experiences: Point of Retirement versus Today

50%

13%

9%

28%

Currentlyandpriortore>ring

Sincere>ringbutnotprior

Beforere>ringbutnotnow

Neverhadanadvisor


10%

24%

66%

18%

58%

23%

0% 10% 20% 30% 40% 50% 60% 70%

Be.er

Same

Worse

Have/HadanAdvisor-IfDidNot NeverHadanAdvisor-IfDid

Figure 12: Expectation of Current Financial Situation with/without Financial Advisor

Figure 12 is quite interesting but requires a bit of context. Retirees who have, or

had, a relationship with a financial advisor were asked whether they thought their

financial situation would currently be better, worse, or unchanged had they not

used an advisor. Retirees who have never used the services of a financial advisor

were asked the same question. What is striking is the extent to which those who

have never worked with a financial advisor believe that their financial situation

would not be any better if they had used an advisor, versus the two-thirds of those

who have or had that relationship believing they would be financially worse off.

Those who don’t use an advisor are most likely to believe that they simply add

no value, whereas those who have experience with an advisor are most likely to

hold a conviction that the absence of that advisor would have had a material,

negative impact on their wealth. In many, perhaps most, cases this conviction may

be grounded in specific instances where the advisor recommended a course of

action that benefitted the individual, versus another course of action that would

have been detrimental to their financial well-being. Further validating this analysis,

67 percent of those who have never used an advisor cited “able to do my own

planning and investing” as the reason they chose not to work with a financial

advisor.

66%

66 percent of

retirees believe

they would be

financially worse

off without their

advisors


44%

35%

26%

16%

9%

41%

61%

56%

60%

13%

15%

4%

8%

24%

6%

0%

0%

10%

0%

72%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Amountofsavingsnotneeded

Abilitytomakefinancialdecisions

Abilityto alterspendingtopreservesavings

ImpactofinflaEon onexpenses

Abilitytofindfull-orpart-Emeemployment

Much/SomewhatBeSer AsExpected Much/SomewhatWorse NotApplicable

Figure 13: Financial Life in Retirement versus Expectations

LIVING IN RETIREMENT

To begin with, Figure 13 shows how financial realities in retirement

compare to expectations at the point of retirement.

Except for inflation, measures such as the extent to which retirees

have not had to tap into savings, the ability to alter spending as

necessary to avoid increasing withdrawals from savings, and the

ability to make sound financial decisions have all been as retirees

expected when they entered retirement or have been somewhat

or much better than their expectations. Even inflation, though

cited as worse than expected by one in four retirees, does not

seem to be a significant issue. Finding employment is a concern of

few retirees, as most have not sought it.

In an environment where defined benefit pension plans are rapidly becoming a thing of the past,

the insured retirement industry exists to provide solutions for pre-retirees to accumulate financial

wealth prior to retirement, and convert that wealth into sustainable, lifetime income during

retirement. In developing and marketing these solutions, it is critical to understand how Americans

in retirement perceive their lives – their successes, the way retirement might differ from their

expectations, and their satisfaction with their investments, savings vehicles and other solutions.

72%

72% of retirees are

not currently seeking

employment


25%

25%

15%

14%

9%

8%

18%

0% 5% 10% 15% 20% 25% 30%

Big.cketitems(car,boat,etc.)

Vaca.ons,leisure

Taxes

Unexpectedexpenses

Children/grandchildren

Medicalexpenses

Other

Figure 14: Expenses Paid Using Withdrawals from Retirement Savings

Figure 15: Disposition of Residence Since Retiring

While current retirees do not appear to have a

significant need to use their savings for regular income,

the most likely reason for them to tap into their savings,

as noted earlier, is to satisfy RMD rules. However, some

are using their savings for discretionary spending, such

as the purchase of a car or boat, and non-discretionary

spending, for example to cover medical or other

unplanned expenses. Figure 14 details some of their

uses of retirement savings.

The instances of withdrawals being taken to pay

medical expenses are notable for being under 10

percent. Future retirees are likely to be more heavily

burdened by medical expenses and are acutely aware

of it; 69 percent of baby boomers are concerned

about incurring significant medical expenses in their

later retirement years.5

“Retiring and moving to Florida” is a bit of a cliché in

the United States, but according to Figure 15 most

retirees have stayed put.

More than six in 10 retirees continue to live in the same

house in which they retired, while only one in four sold a

home and purchased a smaller one to reduce expenses.

With 43 percent of retirees continuing to realize the

same or higher income after retirement, selling a home

and relocating to a smaller residence may be less of an

imperative for current retirees. This is unlikely to be the

reality for future generations of retirees. Not only will

pensions be less prevalent, but it is very likely that a

higher percentage of future retirees will carry mortgage

balances into retirement, and that those mortgages

will be more burdensome. Fannie Mae found in a 2017

study that older Boomers were more likely to carry a

mortgage into retirement in 2015 than were members

of the silent generation the same age in 2000, and

those mortgages will tend to be more of a financial

burden. Historically, a house in the United States cost

three to four times median annual household income;

this ratio increased to five during the housing bubble of

the 2000s and is currently about 4.5.6


72%

72% of retirees

believe they are

more secure in

retirement than

their parents

Many, if not most, retirees would have observed their parents navigating retirement – in fact some

younger retirees may still have parents living late into retirement. Figure 16 shows current retirees feeling

that they are more financially secure in retirement than are/were their parents.

In addition to feeling more secure than they think their parents are or were, most retirees feel more secure

now than when they retired. More than one-half believe they are better off financially now than at the

point of retirement, while 36 percent say they are about as well off now as when they retired.

72%

19%

9%

Moresecure

Aboutthesame

Lesssecure

Figure 16: Retirement Security Compared to Parents

25%

4%

6%63%

2%

Soldhome,boughtsmaller

Soldhome,didnotbuyanother

Didnotsellbutdidmove

Stayedinsamehouse

Didnotownahome

Figure 15: Disposition of Residence Since Retiring

63%

63% of retirees

remained in

their home after

retiring


Finally, how do retirees feel about the investment vehicles they

use for their retirement savings? Since most are maintaining or

growing their investable assets, and have been for many years,

their satisfaction levels should be instructive for those currently

saving for retirement. Figure 17 looks at how they feel about

various types of investment and savings vehicles.

Retirees report the highest levels of satisfaction with their

ownership of IRAs, stocks/bonds/mutual funds not held in

an IRA, and DC plans such as 401(k)s. Savings accounts,

cash value life insurance, and hard assets such as gold are at

the other end of the spectrum (dissatisfaction with savings

accounts is no doubt rooted in years of historically low interest

rates). Annuities rate quite well in terms of retirees’ satisfaction,

especially among retirees receiving guaranteed lifetime income

payments, 79 percent of whom are very or somewhat satisfied

with their annuities, on par with IRAs, stocks, bonds mutual

funds, and 401(k) plans.

80%

79%

79%

77%

73%

63%

55%

50%

48%

39%

16%

15%

12%

18%

20%

26%

29%

41%

46%

4%

6%

9%

5%

7%

11%

16%

24%

11%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

IndividualRe7rementAccount(IRA)

Stock,bonds,mutualfunds (notinIRA)

Annui7es-Receiving Life7meIncome

401(k)

Realestate/rentalproperty

Annui7es-NotReceiving Life7meIncome

Businessownershipinterest

Savingsaccounts/CDs

Cashvaluelifeinsurance

Hardassets(e.g.gold)

Very/SomewhatSa7sfied Neutral Very/SomewhatUnsa7sfied

26%

Figure 17: Satisfaction with Investments

Eight in 10 annuity

owners receiving

lifetime income

payments are

very/somewhat

satisfied with their

annuities

8 in 10


87%

71%

73%

32%

84%

70%

58%

22%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Incomeplanforspouseatdeath

Planforfuneralandfinalexpenses

PlanforcogniBvedecline

Haslong-termcareinsurance*

HasAdvisor DoesNotHaveAdvisor

Figure 18: Contingency Planning

RETIREMENT CHALLENGES

Retirees need to protect themselves by engaging in comprehensive planning,

ensuring they (and their spouses or partners if they have them) have reliable sources

of income throughout retirement, no matter how long that might last. They also need

to be adequately insured against risks such as unexpected medical or other expenses,

the possibility of needing long-term care, and the potential to experience cognitive

decline, which can make older retirees more susceptible to financial exploitation.

Figure 18 looks at the extent to which retirees have prepared for some common events

and contingencies, through the lens of whether they work with a financial advisor.

Most retirees have taken commonly understood planning steps, such as planning for

the continuation of income for the second spouse upon the first spouse’s death and

arranging for the payment of funeral and other final expenses. Looking at less well

understood (but just as important) planning steps, such as having a plan in place

for dealing with cognitive decline or purchasing long-term care insurance, retirees

working with financial advisors are more likely to have taken these steps.

How simple retirement would be if it consisted of nothing but known quantities – how much expenses

might increase, what expenses might be incurred (major medical issue? wrecked car? flooded

basement?) and their costs, and even the date of one’s death (though admittedly few would seek to

acquire that information were it available). The reality, of course, is that retirement contains just as

much of the unforeseen as one’s working life, with a critical difference: after a major financial blow at

age 35, most people have 30 or more working years ahead to mitigate the impact. At age 70, 80, or 90

time and earned income are in short supply.

* Decline rates for long-term care insurance range from 22% to 44% based on age, and coverage can be too expensive for many consumers, contributing to a low purchase instance7.

Retirees with

advisors are 45%

more likely to

have long-term

care insurance

45%


62%

61%

28%

11%

12%

0% 10% 20% 30% 40% 50% 60% 70%

Outofpocket

Medicare

Long-termcareinsurance

Medicaid

Other

Figure 20: Sources of Payment for Long-term Care Costs

Financial advisors can help retirees,

and those planning for retirement,

understand their risks and the

solutions available to mitigate

those risks. Americans are woefully

underinformed when it comes to

understanding retirement risks like

the potential to need long-term

care, and how that care will be paid

for if it is needed. There is a 68

percent chance that someone age

65 or older will become disabled

in at least two activities of daily

living (bathing, feeding, dressing,

transference, and continence) or

suffer cognitive decline and need

long-term care.8 In Figures 19 and

20, retirees vastly underestimate

their risk of needing long-term care

services and are quite misinformed

as to how one pays for such care.

25%

44%

31%

Very/SomewhatLikely

Neutral

Very/SomewhatUnlikely

Figure 19: Probability of Needing Long-term Care

Figure 20 is troubling, as most retirees do not have the

financial resources to pay for long-term care, and Medicare

does not cover long-term care services. The 2018 median

national cost for a semi-private nursing home room is

$85,775 annually.9 Women need care for an average of

3.7 years, men need care for an average of 2.2 years, and

20 percent will need care for longer than five years.9 The

risk of exhausting financial assets due to a long-term care

event is quite real, and underappreciated.


29%

24%

71%

76%

0% 10% 20% 30% 40% 50% 60% 70% 80%

SeriousHealthEvent

SignificantUnexpectedExpense

No Yes

Figure 21: Incurred Significant Medical or Other Unexpected Expense

Other than long-term care, financial shocks during retirement can commonly occur as the result of a significant

health event, such as a heart attack or stroke, or a large unplanned expense, such a major home repair. Figure 21 shows the prevalence among retirees of such financial shocks, and Figure 22 shows the financial impact.

27%

46%

21%

6%

0%

23%

35%

42%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Lessthan$1,000

$1,000to$10,000

$10,000to$25,000

$25,000orMore

Medical Other

Figure 22: Financial Impact of Medical and Other Expenses


As mentioned, financial exploitation is a very real concern for retirees, and even those who have not been

diagnosed with dementia or Alzheimer’s, or who exhibit overt signs of cognitive decline, become more

vulnerable as they age. A 2011 study conducted by Texas Tech University found that test scores on financial

matters such as investments and insurance fall about 2 percent each year starting after age 60, dropping

from 59 percent correct for those in their 60s to 30 percent for those 80 and older. Figure 23 shows that four

in 10 retirees either themselves have experienced successful or attempted financial exploitation, or have a

family member or friend who has had such an experience. And while most attempts are reported to be either

unsuccessful or result in relatively small amounts lost, one in 10 lost more than $1,000, and half of those lost

more than $5,000. This problem can be expected to grow significantly over the next decade, and become more

financially devastating, as the number of retirees swells and those in retirement are more dependent on their

savings to meet expenses.

40%

10%

5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Re+reeorfriend/familyhave experiencedfinancialabuse

Lostmorethan$1,000

Lostmorethan$5,000

Figure 23: Retiree Experience with Financial Exploitation


CONCLUSION

LESSONS FOR FUTURE RETIREES

This report presents many findings, exploring the retirement income, retirement

expectations, planning, and risk management of current retirees with a level

of investable assets that represents some effort expended toward preparing

for retirement. The report focuses on these retirees because they are what

future retirees that can create their own lifetime income streams, or “personal

pensions,” will look like – absent the high instance of pensions. With only 17

percent of private sector workers covered by a defined benefit pension, the onus

will be on the individual to plan for a secure and dignified retirement. Over 40

percent of Baby Boomers have no retirement savings at all, and only 25 percent

are confident they will have enough money to last throughout retirement.11 In

addition to pension income, a significant factor in the success of current retirees

is their relationships with financial advisors. This is true in both their perception,

as retirees feel they have achieved greater financial success as a result of

working with an advisor, and their experience, as those working with advisors

are more likely to have taken concretes steps to prepare for, and protect against,

retirement risks such as cognitive decline. Current workers should consult with

financial professionals to, among other important steps, come up with a plan for

retirement, including savings goals and how adequate, lifetime income will be

created and sustained throughout retirement.


METHODOLOGY

The Insured Retirement Institute (IRI)

commissioned Greenwald & Associates to

conduct a survey of recently retired individuals.

The research was conducted by means of online

surveys completed by 820 Americans with

investable assets of at least $50,000, between

ages 65 and 85 and distributed between those

5-9 years out from retirement and 10-15 years

out from retirement. All findings are based on the

717 survey participants with at least $100,000 in

investable assets. Data were weighted by asset

level to reflect the sample universe. The survey

was conducted from in August 2018. The margin

of error for the survey was ±3.7 percent.

REFERENCES

1 Social Security Administration

2 Retirement Benefits, March 2018 (Bureau of Labor

Statistics)

3 “Boomer Expectations for Retirement 2018,” IRI (2018)

4 Ibid

5 Ibid

6 http://longtermtrends.net

7 American Association for Long-Term Care Insurance

8 U.S. Department of Health and Human Services

9 “Cost of Care Survey 2017,” Genworth (2017)

10 U.S. Department of Health and Human Services

11 “Boomer Expectations for Retirement 2018,” IRI (2018)

Insured Retirement Institute (IRI)1100 Vermont Avenue, NW 10th Floor

Washington, D.C. 20005

P 202-469-3000 F 202-469-3030

10/18

Draft Pending Adoption Attachment Two

Innovation and Technology (EX) Task Force 4/8/19


Draft: 4/17/19

Big Data (EX) Working Group Orlando, Florida

April 6, 2019 The Big Data (EX) Working Group of the Innovation and Technology (EX) Task Force met in Orlando, FL, April 6, 2019. The following Working Group members participated: Doug Ommen, Chair (IA); Elizabeth Kelleher Dwyer, Vice Chair (RI); Lori K. Wing-Heier (AK); Jerry Workman (AL); Ken Allen and Rachel Hemphill (CA); George Bradner and Wanchin Chou (CT); Stephen C. Taylor (DC); Trinidad Navarro and Frank Pyle (DE); Erin VanSickle (FL); Judy Mottar (IL); Rich Piazza (LA); Al Redmer Jr. (MD); Tim Schott (ME); Karen Dennis (MI); Martin Fleischhacker, Phillip Vigliaturo and Fred Andersen (MN); Chlora Lindley-Myers and Angela Nelson (MO); Mark McGill (NJ); Barbara D. Richardson (NV): Jillian Froment (OH); Andrew Stolfi and TK Keen (OR); Michael McKenney (PA); Kendall Buchanan (SC); J’ne Byckovski (TX); Tomasz Serbinowski (UT); Michael S. Pieciak represented by Christina Rouleau (VT); and Mike Kreidler represented by AnnaLisa Gellermann (WA). 1. Adopted its Feb. 25 Minutes Commissioner Ommen said the Working Group met Feb. 25 and took the following action: 1) adopted its 2018 Fall National Meeting minutes; and 2) discussed its 2018 workstreams and 2019 charges. Director Froment made a motion, seconded by Ms. Nelson, to adopt the Working Group’s Feb. 25 minutes (Attachment Two-A). The motion passed unanimously.

2. Received a Report from the Casualty Actuarial and Statistical (C) Task Force Mr. Piazza said the Casualty Actuarial and Statistical (C) Task Force continues to invite coordination with the Working Group to: 1) draft and propose changes to the Product Filing Review Handbook to include best practices for the review of predictive models and analytics filed by insurers to justify rates; 2) draft and propose state guidance for rate filings that are based on complex predictive models; and 3) facilitate training and the sharing of expertise through predictive analytics webinars. Mr. Piazza said since the 2018 Fall National Meeting, the Task Force exposed a white paper, Regulatory Review of Predictive Models, on best practices and providing guidance to the states. He said the purpose of the white paper is to identify best practices state insurance regulators could consider when reviewing a rating plan submitted to the state that includes a complex model. In addition, he said the white paper will include the information state insurance regulators may need to meet the objective of a best practice. Mr. Piazza said 18 comments were received. Eight were received from the states and 10 were from the industry. Mr. Piazza said while there was general support for the white paper and agreement, best practices are beneficial if done correctly. He said concerns were expressed regarding whether the identified are too burdensome. He said some comments stated that a one-size-fits-all approach is not realistic, and many states already have reasonable methods and requirements for reviewing models. Mr. Piazza said the volunteer drafters have mapped the comments to the relevant portions of the white paper and will recommend changes, which will then be re-exposed for public comment. Mr. Piazza said there are four policy issues raised by the white paper on which the Working Group can assist the Task Force. These issues include: 1) confidentiality concerns; 2) broadening the scope beyond generalized linear models used in auto and homeowners rate filings, and into other insurance operations such as underwriting and claims; 3) causality versus correlation and whether correlation is all that should be considered; and 4) transparency for consumers on what data is used, how it is used, and its impact on premium. Commissioner Ommen said the Working Group continually hears the need for state insurance regulator training. He noted that the organizers of the Global Insurance Symposium (GIS) have agreed to pilot training on big data analytics, and the NAIC has agreed to fund state insurance regulators to attend. He said 70 state insurance regulators will be attending.




Commissioner Ommen said, on March 14, he and Superintendent Dwyer gathered a group of state insurance regulators who have been working on big data issues for a meeting in Kansas City, MO. He said the goal of the meeting was to determine what the real needs are for the state insurance departments. He said he values the feedback of all interested parties. 3. Heard a Report on NAIC Staff Recommendations Andrew J. Beal (NAIC) said, on April 17, 2018, the Executive (EX) Committee directed: 1) NAIC management to “conduct research on the appropriate skills and potential number of resources for the organization to help NAIC members in coordinating their reviews of predictive models”; and 2) the NAIC Legal Division to prepare a memorandum analyzing “methods and procedures to be followed in sharing predictive modeling information in order to maintain applicable statutory confidentiality protections.” Mr. Beal said he would update the Working Group on the first directive to determine the appropriate skills and resources for the NAIC to help its members coordinate their reviews of predictive models. He noted that the NAIC Legal Division is continuing its work on the second directive, and their recommendations will be made at another time. Mr. Beal said over the past few months, NAIC management has had several conversations with various members of the Working Group regarding the needs of state insurance regulators in reviewing and sharing information with other state insurance regulators about predictive models. He noted that reviewing predictive models would be limited to technical assistance and support, including predictive risk correlation, actuarial review and experience, and education and training. He said the NAIC would not be exercising any regulatory authority, nor attempting to expand or redefine existing laws or regulations. As an example, he said the NAIC might identify data elements used in a model, such as education and income, but would not comment on the appropriateness of the use of such data. Mr. Beal said NAIC management has developed the following recommendations for achieving the Executive (EX) Committee’s first directive:

1) The NAIC should hire a technical staff resource (one full-time employee initially, but this may be increased if needed) to provide technical support for state insurance regulators, including predictive risk correlation, actuarial review and experience, as well as education and training.

2) The NAIC should develop a tool, such as a database, for state insurance departments to share information with other

state insurance departments about their review of models.

3) The NAIC should develop and implement an education and training program for state insurance regulators. Separate training, as needed, will be developed for actuaries and front-line rate and form review staff.

Regarding hiring a staff resource to provide technical support to state insurance regulators, Mr. Beal said the NAIC would move forward to identify the appropriate skills and experience for the position. He said once the position specification is finalized, the NAIC would post the position and begin recruiting candidates. Mr. Beal said the primary of purpose of the NAIC developing a state insurance regulator tool and/or database is for state insurance regulators to share information about models with their colleagues in other states. He said NAIC staff are currently conducting research and analysis on this project. He said the work on this project will be guided by the NAIC Legal Division’s work currently underway regarding the “methods and procedures to be followed in sharing predictive modeling information in order to maintain applicable statutory confidentiality protections.” He said once all of this work is completed, it is possible that a formal proposal, which may include a fiscal impact statement, will be presented to the Executive (EX) Committee for its consideration. Regarding the development and implementation of a training program for state insurance regulators, Mr. Beal said efforts are already underway. He noted that a pilot training program is planned for the GIS, which is being held April 23–25 in Des Moines, IA. Additionally, a training program is planned for the NAIC/NIPR Insurance Summit, which is being held June 3–7 in Kansas City, MO. Mr. Beal said these two initial training programs will be evaluated to determine what changes or enhancements are needed for future programs.




Mr. Chou noted that some larger companies have many data scientists working on their rating models. He said one full-time employee does not seem to be enough. He suggested consulting with some of the larger property/casualty (P/C) companies. Mr. Keen and Ms. Nelson expressed their appreciation and noted that the recommendations meet the three areas for which the Working Group requested assistance. David F. Snyder (American Property Casualty Insurers of America—APCIA) said the recommendation for additional training for state insurance regulators is welcome, and he noted the work of the Working Group has gone a long way in making state insurance regulators more comfortable with the issues raised by the use of big data. He said companies have confidentiality concerns with the sharing of the rate models and analysis. He noted that this is intellectual property, and companies have large investments in them. Companies want state insurance regulators to have the information they need, but confidentiality is essential, so they look forward to working with the Working Group on this. Regarding an NAIC resource providing technical assistance, Mr. Snyder said he fears the NAIC may inadvertently exercise authority at a level not authorized by the state. He said the position must be technical and careful not to become quasi-regulatory. He said he understands that this is a shared concern, and he looks forward to dialoging about the resource. Birny Birnbaum (Center for Economic Justice—CEJ) said he is pleased to see movement on the recommendations. He noted that many states have access to actuaries and actuarial resources. He said the NAIC resource should complement these state resources and not replicate them. 4. Discussed Next Steps Regarding the Use of Data for Life Insurance Underwriting Commissioner Ommen summarized the 2018 activity of the Working Group. He said the Working Group heard a presentation during the 2018 Summer National Meeting from Eric Sondergeld (Life Insurance Marketing and Research Association—LIMRA), during which he provided an overview of LIMRA’s survey of insurance companies regarding the use of data in life insurance underwriting. In October 2018, the Working Group heard a presentation from Director Bruce R. Ramge (NE) on market conduct examination standards for life insurance underwriting. Commissioner Ommen said these two presentations led to additional discussions during the 2018 Fall National Meeting on how the use of data models for life insurance underwriting has become more common as insurance companies move to eliminate the use of medical examinations and the collection of fluids. He said questions have been raised regarding whether these innovations warrant the development of additional regulatory tools, whether state insurance regulators should be examining vendors that are supplying data to insurers, and whether vendors are supplying similar data and models to multiple insurers. He noted the Life Actuarial (A) Task Force is focusing on the actuarial soundness of the new data being used and potential long-term solvency issues. Mr. Andersen said accelerated life underwriting involves replacing medical exams and the collection of bodily fluids with information from data models similar to aspects of credit-based scoring. He said the Life Actuarial (A) Task Force is evaluating the actuarial soundness of the method for predicting mortality. Mr. Andersen made a motion, seconded by Mr. Allen, that the Life Insurance and Annuities (A) Committee, through an existing working group or by appointment of a new working group, and in collaboration with the ongoing work of the Life Actuarial (A) Task Force, study the use of external data and data analytics in accelerated life underwriting, and draft and propose appropriate state guidance or best practices. Mr. Birnbaum said he supports the motion for two reasons. He said the issues raised are issues of fairness and regulatory standards for pricing, underwriting and the treatment of consumers, and these should be addressed by the Life Insurance and Annuities (A) Committee. Secondly, he said it is important to identify the types of data that are used. He said there has been advances in the availability of genetic testing information, as well as the use of facial analytics, credit-scoring and driving records, etc. He said state insurance regulators need to know the types of data being used and how they are being used by insurers. There was no further discussion, and the motion passed unanimously.




5. Discussed the Use of Data for Claim Settlements Commissioner Ommen said the Working Group is ready to move to the review of another area of regulatory concern in the use of big data. He noted that the 2017 work plan identified several areas to be reviewed, including the use of big data in claim settlements. Mr. Keen supported looking more deeply into the use of big data in claim settlement practices. He said Oregon hears often from consumers who are uncertain how insurers are arriving at claim settlement amounts. Ms. Nelson asked if claim settlement practices include looking into claim valuation software in addition to antifraud efforts. Mr. Chou supported examining claim valuation software. Commissioner Ommen said the Working Group may also elect to examine claim valuation software. Peter Kochenburger (University of Connecticut School of Law) said claim settlement practices is an important area to look into, because claims are where the insurer’s promise is tested. He noted that there is a line between models that determine valuations and models that predict behavior. He said he is concerned with the use of models for claims optimization, which evaluate the potential of settling a claim at a set amount based on the characteristics of the claimant. He believes this practice would be illegal in most, if not all, the states, and said it is worth examining whether it occurs. Mr. Snyder said companies want to pay the fair value of a claim as quickly as possible. Technology has enabled many claims that were settled in a matter of days to now be settled within hours. He noted that antifraud statutes require companies to use models to identify and resist claims fraud. Mr. Birnbaum said he supports looking into claim settlement practices. He said claim settlement practices and antifraud efforts are intertwined and use the same databases. He noted that claims databases are not subject to the protections of the federal Fair Credit Reporting Act (FCRA). He said that makes it incumbent on state insurance regulators to look into these issues. He said the Working Group should approach this with an open mind. The use of technology and big data has great benefits, but there are areas that need improvement. Commissioner Ommen said there is consensus that the next area of review for the Working Group will be claims practices. Having no further business, the Big Data (EX) Working Group adjourned. W:\National Meetings\2019\Spring\TF\Innovation\Big Data\4-BDWG.docx

Documents

LIFE INSURANCE AND ANNUITIES (A) COMMITTEE...Lamy (NH); Bogdanka Kurahovic (NM); Elizabeth Kelleher Dwyer, Matt Gendron and Sarah Neil (RI); Mike Boerner (TX); Tomasz Serbinowski (UT);