Kentucky state rep – and head of national group of legislators – introduces bill that would preserve right to resell benefits
A bill that would keep insurers from reneging on living and death benefits for annuities sold on the secondary market has been passed by Kentucky's banking and insurance committee.
The bill, sponsored by state Rep. Robert R. Damron, yesterday cleared the House Standing Committee on Banking and Insurance
The bill by Mr. Damron, a Democrat who is also president of the National Conference of Insurance Legislators, appears to be bucking the trend among state insurance regulators.
The Interstate Insurance Product Regulation Commission, a group of insurance regulators from 35 states and Puerto Rico, recently voted in favor of a uniform provision that would permit insurers to terminate at their discretion guaranteed living and death benefits in the event of a change in ownership or assignment.
That provision, which was approved by all 30 members of the commission that voted — with the exception of Indiana — is slated to go into effect by the end of May.
“To me, these benefits are something people purchase when they buy an annuity,” Mr. Damron said. “You're paying for the living-benefits rider, and it belongs to you, so it's a property issue.”
Though the bill in Kentucky went through with a sizable majority vote, state Rep. Joseph M. Fischer called for a study of the uniform standards promulgated by the IIPRC. Mr. Fischer, a Republican, wants to know the advantages and disadvantages of enacting legislation to regulate living and death benefits in annuities.
In an amendment to the bill's language, Mr. Fischer sought to delete the original provisions of the bill and call on legislative staff to present the findings of the study at the November meeting of the Interim Joint Committee on Banking and Insurance.
A call to Mr. Fischer for further comment was not immediately returned.
NCOIL is due to look at the issue of the secondary market for annuities at its July meeting as it weighs writing up a model act to address the sales.
In the meantime, Mr. Damron plans to keep pushing his bill, which could be voted on as early as tomorrow by the Kentucky House. However, the state Legislature is in session only for two more weeks, so Mr. Damron thinks the odds of the bill passing this time around are slim.
Still, Mr. Damron remains undeterred, promising to re-purpose the bill for next year if necessary. “A secondary market and the ability to access it is part of the free-market system,” he said. “I look at these benefits as individual assets.”
