Commissioner Ted Nickel to Lead NAIC Working Group
Madison, WI—At a recent meeting of the National Association of Insurance Commissioners (NAIC) Wisconsin Commissioner Ted Nickel was appointed to lead a new working group to evaluate the solvency and appropriate consumer protections for contingent deferred annuities.
"The working group's charge is pretty straightforward," said Nickel. "Regulators need to better understand these products and develop an appropriate regulatory model that both protects consumers and ensures the continued availability of contingent deferred annuities to consumers."
Contingent deferred annuities, or CDAs, are products that protect retirees against outliving their retirement savings, a situation referred to as "longevity risk." A CDA will provide continued lifetime income to retirees who end up depleting their retirement assets. CDAs can be attached to a 401(k) or a mutual fund, for example.
In 2011 the NAIC evaluated CDAs and their existing regulatory structure. A subgroup of the Life and Annuities (A) Committee determined that CDAs should be regulated as life insurance products and sold by licensed life insurers. The subgroup's recommendation to the A committee that a working group be created was approved at the NAIC's 2012 Spring National Meeting on March 4, 2012.
"The CDA Subgroup has provided us the directions," said Nickel. "The working group will develop specific recommendations to state regulators that will address any gaps or inadequacies in existing regulation."
Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.