WASHINGTON, D.C. (July 29, 2010) — NAIC President and West Virginia Insurance Commissioner Jane L. Cline issued the following statement today in response to media reports regarding Retained Asset Accounts:
“Retained Asset Accounts (RAA) are a life insurance claims settlement mechanism that have been available to consumers for at least two decades. The accounts were initially created at the request of consumers to provide options for receiving benefits from a life insurance policy, and with proper disclosure, consumers have generally been happy with this flexibility. Traditionally, consumers earn interest under these accounts, allowing their benefit to grow without the need to make impulsive decisions about how to manage the benefit.
“The NAIC is re-reviewing the disclosure requirements associated with RAA and is developing a consumer alert to help policyholders better understand the terms of these kinds of settlements. Regulators are also reviewing the transaction requirements/terms for the “checkbook” usage associated with these types of policies. “Depending on how an insurance company manages its RAA program, these accounts may not be FDIC insured. However, all states have a life insurance guaranty fund to protect policyholders.
“In addition, all state insurance departments maintain active consumer assistance programs to address consumer complaints, and RAAs have generated few if any complaints. Any consumer who is confused, feels they have been mistreated regarding these types of settlements, or believes there may have been a misrepresentation of the settlement terms should contact their state insurance department.”
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