The NAIC Life Actuarial Task Force is revisiting Actuarial Guideline 49-A (AG 49-A), aiming to tighten rules around life insurance illustrations and impose consistent disclosure standards across carriers.
During the NAIC summer meeting, the task force voted to re-expose proposed revisions to Section 7 of the guideline for another 30-day public comment period.
This section governs how insurers present historical index performance, define geometric averages, and disclose related data in policy illustrations.
Regulators flagged issues earlier this year after informal discussions among several states raised questions about the reliability of historical index returns used in these materials.
According to Ben Slutsker, director of life actuarial valuation for the Minnesota Department of Commerce, regulators found no immediate misconduct but expressed concern over inconsistent disclosure practices and potential consumer misunderstanding.
The proposed revision caps the historical performance window at 25 years for index account illustrations.
This addresses the common practice where insurers displayed multiple historical averages—often derived from backcasting—and positioned them next to maximum illustrated rate tables.
These historical averages frequently showed rates two to four times higher than what was permitted for maximum illustrations.
Some insurers defended the approach, arguing no explicit restriction barred them from including such data and that it helped consumers understand how indexes could behave across various timeframes.
To prevent misleading comparisons, the updated guideline would ban index tables for products with fewer than five years of historical data.
The American Academy of Actuaries backed this threshold, warning that showing hypothetical returns based on limited data risks confusing policyholders.
However, Mike Yanacheak of the Iowa Insurance Division said five years of performance data offers little insight.
It’s not even, in many cases, an economic cycle. For many indices, five years is insufficient to assess any meaningful trends.
Mike Yanacheak of the Iowa Insurance Division
Other regulators agreed, with several recommending a minimum of 10 years to reflect broader market behavior and improve transparency in illustrations.
