The National Association of Insurance Commissioners is “re-reviewing” disclosure requirements regarding retained asset accounts (RAAs), said Jane L. Cline, the association’s president.

Jane Cline

Cline, who also serves as West Virginia’s insurance commissioner, said state regulators also are preparing a consumer alert to help policyholders better understand the terms included in these settlements, and reviewing transaction requirements and terms for the “checkbook” usage included with these policies.

Cline’s comments came after New York Attorney General Andrew Cuomo, the U.S. Department of Veterans Affairs and the New York State Insurance Department have begun to investigate life insurance companies’ profits from retained death benefits for possible fraud. Reports indicate the investigations are exploring notifications to consumers, as well as the difference between the insurers’ interest income and the rate paid to beneficiaries.

Available for at least 20 years, Cline in a statement called RAAs a “settlement mechanism” 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,” Cline said. “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.”

She said whether the accounts are guaranteed by the Federal Deposit Insurance Corp. is a matter of how the insurance company manages the accounts. Regardless, Cline said, states have life insurance guaranty funds that would protect consumers.

“In addition, all state insurance departments maintain active consumer assistance programs to address consumer complaints, and RAAs have generated few if any complaints,” she said. “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.”