04/29/2003 01:37 PM Senate L&C

        CSSSHB 184(L&C)am-INDIVIDUAL DEFERRED ANNUITIES                                                                     
                                                                                                                                
CHAIR   BUNDE  announced   CSSSHB   184(L&C)am  to   be  up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  COGHILL, sponsor,  said the  National Association                                                               
of  Insurance Commissioners  (NAIC)  made  a recommendation  with                                                               
regard  to minimum  values of  annuity contracts.  Currently, the                                                               
minimum  amount is  set in  statute. HB  184 deals  with deferred                                                               
annuities and has an effective date.  It started out on a minimum                                                               
non-forfeiture amount  of 3 percent.  However, the NAIC  does not                                                               
think  that  can continue  and  has  asked  to have  the  statute                                                               
changed  from 3  percent to  1.5 percent.  In addition,  the NAIC                                                               
wants to bring in  an index system and faxed him  copies of it as                                                               
he introduced the  bill. Although he is still  learning about the                                                               
index  system, he  explained  that it  basically  allows for  the                                                               
reasons for the variable indexing.  Page 2, subsection 2 contains                                                               
what they  will need to study  the most - the  interest rate used                                                               
to determine  the minimum non-forfeiture  amount. The  NAIC wants                                                               
to halve the cap  of 3 percent and on line 8, and  tie it to a 5-                                                               
year constant  maturity treasury, an  index that the  NAIC agreed                                                               
would always be there and could be discovered readily every day.                                                                
                                                                                                                                
Subsection (c) is  the floor, which is a  resulting interest rate                                                               
of  not less  than  1  percent. This  protects  the company  from                                                               
collapsing under  a payout it  can't sustain and it  protects the                                                               
customer who wants  to get money out under  a non-forfeiture from                                                               
costing more than it's worth.                                                                                                   
                                                                                                                                
REPRESENTATIVE  COGHILL said  the Division  of Insurance  and the                                                               
National  Association  of  Insurance Commissioners  endorse  this                                                               
bill. Fourteen other states have already made this change.                                                                      
                                                                                                                                
CHAIR BUNDE  said it would  be nice  to have a  win-win situation                                                               
and that  he looked  forward to  working with  him on  this issue                                                               
next week.