1. Approval Process of Life Insurance Products by The Central Bank of Trinidad and Tobago September 18 th 2006 Prepared by Marlon Marquis and Michelle Assing Prepared by Marlon Marquis and Michelle Assing

2. 2 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Overview Regulatory Role in product approvals Approval process Questions ??

3. 3 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Regulatory Role in product approvals Requirement of the Insurance Act (Main sections: 24, 117-124, 132-138) Opinion on form of policy/application/ endorsement –Must be in the public’s interest –Not fraudulent –Not unjust –Not imprudent (Proposed amendment to IA) Ensure that the rates are approved by the actuary Protection of policyholders’ interests

4. 4 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Approval Process AssessmentFindings & Recommendations Complete checklist Initial Review

5. 5 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Initial Review Review items against checklist Policy Contract Application Form Actuarial Certificate Report by the Actuary Premium rates Maximum commission rates Maximum discount, if any Marketing material Reinsurance Treaty Board of Inland Revenue approval, if product is a registered annuity

6. 6 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Approval Process Review for compliance with IA and protection of p/holder rights AssessmentFindings & Recommendations Acknowledge & request Complete checklist Initial Review Policy contract Application form Actuarial certificate Report by the Actuary Reinsurance treaty Marketing material

7. 7 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment – Policy Contract/Endorsement Review for completeness (All items referred to must be present) Contract wording must be clear –Avoid ambiguity or misleading information –Benefit provisions must be clearly communicated –Conditions and exclusions are not misleading Ensure that all terminology used is defined Ensure consistency in use of words / terms Check for accuracy (Typographical and grammatical errors) Ensure compliance with the Insurance Act Examples: –Written proof of age is a condition precedent to the payment –Cannot void due to misstatement of age or incorrect statement unless fraudulent or significant to the risks

8. 8 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment – Application Form Consistency with the policy contract Compliance with the Insurance Act –place and date of birth is required –if sold to minor must have consent of parent

9. 9 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment - Actuarial Certificate Requirement of the IA –Rates must be approved by the actuary Ensure that the actuary is the appointed actuary on file at the CBTT

10. 10 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment - Report by the Actuary Ensure that the product features are the same as those priced by the actuary Provides other useful information –Pricing assumptions –Risk profile of the product –Identify any guarantees on the product –Reservations by the actuary

11. 11 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment - Marketing Material Wording must be clear –Must not be misleading or ambiguous Must be accurate and consistent with product specifications

12. 12 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment - Reinsurance Ensure consistency of the Report by the Actuary and the reinsurance treaty details Information on the company’s exposure

13. 13 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Approval Process Review for compliance with IA and benefit of p/holder Product review AssessmentFindings & Recommendations Completeness Consistency Clarity Accuracy Acknowledge & request Complete checklist Initial Review Policy contract Application form Actuarial certificate Report by the Actuary Reinsurance treaty Marketing material

14. 14 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Assessment - Product Review Description (Highlight major features) Compliance issues (Identify non compliance with the IA) Product risks (Identify significant risk exposures) Reinsurance (Synopsis of reinsurance arrangements) Summary of findings / recommendations

15. 15 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Approval Process Review for compliance with IA and benefit of p/holder Product review Communicate with RO Approve if responses are satisfactory AssessmentFindings & Recommendations Completeness Consistency Clarity Accuracy Acknowledge & request Complete checklist Initial Review Policy contract Application form Actuarial certificate Report by the Actuary Reinsurance treaty Marketing material Follow-up with company Concerns addressed Approval granted Description Compliance issues Product risks Reinsurance Summary

16. 16 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Questions ??

17. 17 CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT September 18th 2006 Thank you! Copies of this presentation are available upon request: massing@central-bank.org.tt