{"id":4100,"date":"2026-04-07T04:38:07","date_gmt":"2026-04-07T04:38:07","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/naic-readies-launch-of-new-illustration-requirements-carlton-fields\/"},"modified":"2026-04-07T04:38:07","modified_gmt":"2026-04-07T04:38:07","slug":"naic-readies-launch-of-new-illustration-requirements-carlton-fields","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/naic-readies-launch-of-new-illustration-requirements-carlton-fields\/","title":{"rendered":"NAIC Readies Launch of New Illustration Requirements | Carlton Fields"},"content":{"rendered":"<div id=\"html-view-content\">\n<p>On March 31, Ben Slutsker, chair of the National Association of Insurance Commissioners\u2019 Life Insurance and Annuities Illustration Working Group, made clear that \u201cit is a go\u201d to \u201caddress annuity illustrations, and illustrations more broadly.\u201d This followed the working group\u2019s receipt of comments and ensuing discussion on the chair\u2019s exposed question \u2014 \u201cWhat are both short-term and long-term approaches to ensure consumers receive reasonable expectations for index annuity returns at the point-of-sale?\u201d\u2014 which orbited around several key themes:<\/p>\n<ul>\n<li><strong>Reason for Illustrations<\/strong>. Illustrations are not meant to be predictors of performance but rather explain how an insurance product operates, including a \ufb01xed index annuity, under different market conditions.<\/li>\n<li><strong>Proprietary Indexes<\/strong>. The double-digit illustrated rates observed by regulators are propelled by proprietary indexes for which backcasted data is used. Many commenters theorized that prohibiting illustrations based on the proprietary indexes \u2014 or at least those having no meaningful actual history (i.e., 10 years, as required by Model 245) \u2014 would bring back to earth the illustrated rates that led to regulators\u2019 concerns that unreasonable consumer expectations are being created.<\/li>\n<li><strong>Crediting Factors<\/strong>. The at-issue caps, participation rates, and other crediting factors used in the illustration also thrust the illustrated rates higher. Some commenters questioned whether the illustrations should show the impact of changes to these crediting factors. Others suggested that insurers should disclose the history of these crediting factors, with one proposing that the history should be for all index life and annuity products, which fails to recognize that different asset portfolios could support different products and result in different crediting factors.<\/li>\n<li><strong>Model 245<\/strong>. As noted in the working group\u2019s \u201cDecision Points for Next Steps\u201d document, Slutsker and several commenters discussed whether Model 245\u2019s illustration and disclosure requirements would be a useful starting point for addressing regulatory concerns with annuity illustrations. Some commenters asked whether regulators had compared illustrations used in those states that have adopted Model 245\u2019s illustration requirements against illustrations used in the other states. Slutsker acknowledged that this was on the regulators\u2019 task list.<\/li>\n<\/ul>\n<p>Several commenters, including actuary Tomasz Serbinowski of Utah, argued against using Model 245 as a starting point.<\/p>\n<ul>\n<li>Several commenters propounded that the recent \ufb01nancial markets are an aberration and that the persistent growth of these markets will not continue. Thus, it was argued, developing illustrated rates based on recent history may also result in unrealistic consumer expectations.<\/li>\n<li>Some also believed that annuity illustrations should not be based on the different index crediting options. Serbinowski suggested that the illustrated rates should be hypothetical with round numbers to signal to consumers that the illustrated rates are not projections of what could happen. Another commenter suggested using the U.S. Treasury rate, plus a prescribed percentage.<\/li>\n<\/ul>\n<p>Slutsker announced that a new 45-day exposure would be issued asking: \u201cWhat should be the starting point of a short-term solution: Model 245 language or something else (such as AG 49-A, other guidance, or starting anew)?\u201d<\/p>\n<p>For proposed starting points using existing guidance, commenters are asked to provide the types of modi\ufb01cations that would be necessary to address the regulatory concerns regarding illustrated rates and transparency. For starting anew, the working group seeks comment on how the approach\u2019s scope can be limited to a short-term solution before turning to a longer-term solution. Slutsker also started the countdown for the new short-term approach for annuity illustrations, stating that blastoff would be within the year.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>On March 31, Ben Slutsker, chair of the National Association of Insurance Commissioners\u2019 Life Insurance and Annuities Illustration Working Group, made clear that \u201cit is a go\u201d to \u201caddress annuity illustrations, and illustrations more broadly.\u201d This followed the working group\u2019s receipt of comments and ensuing discussion on the chair\u2019s exposed question \u2014 \u201cWhat are both [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4101,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2877,2878,2876,1795,2874,2875,314],"class_list":["post-4100","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-carlton","tag-fields","tag-illustration","tag-launch","tag-naic","tag-readies","tag-requirements"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/4100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=4100"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/4100\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/4101"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=4100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=4100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=4100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}