Drawing Up the NAIC’s Game Plan on Annuity Illustrations

The National Association of Insurance Commissioners’ (NAIC) Life Insurance and Annuities Illustrations (A) Working Group has been building out its approach to amending the annuity illustration requirements of the NAIC’s Annuity Disclosure Model Regulation (Model #245). The amendments are being made to address regulatory concern that illustrations are creating unrealistic consumer expectations. Based on an informal review of indexed annuity illustrations, regulators found that two-thirds of products reviewed showed illustrated rates between 11% and 27%. Nearly all the highest illustrated rates are traced back to new proprietary indexes illustrated using backcasted data.

On June 2, 2026, the working group’s chair, Ben Slutsker, exposed two items for comment by interested parties: a summary guide cataloging potential modifications to Model #245 and a flow chart asking whether an actuarial guideline could serve as a stopgap measure while states work to adopt an updated model.

Seven comment letters were received from the American Academy of Actuaries, the American Council of Life Insurers, the Committee of Annuity Insurers, Finseca, the Indexed Annuity Leadership Council, the Insured Retirement Institute, and the New York State Department of Financial Services (NYDFS). In the letters, industry commenters huddled up on key points of consensus for the NAIC’s game plan:

Play 1: Illustration Length
During its July 30, 2026, meeting, the working group reached a preliminary consensus to run three plays to reduce illustration length: shorter illustration ledgers, fewer redundancies in narrative summaries, and a combined side-by-side ledger.

Notably, working group members want these built in as standardized requirements, rather than optional features, with actuary Tomasz Serbinowski of Utah warning that leaving shorter illustration periods optional may invite unwanted gamesmanship by carriers.

Play 2: Disclosures
At the July 30 meeting, numerous working group members expressed doubt that adding more disclosure language to illustrations would move the ball. Mike Yanacheak, chief actuary at the Iowa Insurance Division, noted that once consumers lock on to a high illustrated number, it is difficult for any disclosure text to run interference against the expectations that the high illustrated rates created. Additionally, Matt Elston, chief life actuary at the Ohio Department of Insurance, emphasized that the disclosure language already included in these illustrations is often buried within the lengthy illustrations.

While industry commenters have expressed support for additional disclosures, this did not move the chains, as the working group did not endorse any such disclosure concept.

Play 3: Accountability
At an August 6, 2026, meeting, the working group discussed whether a company officer attestation is enough coverage, or if annuity illustrations need a dedicated “illustration actuary,” pulled from the life insurance illustration playbook. In an informal poll, support for company officer attestation came out in the lead, but a group of regulators expressed their preference for an official illustration actuary’s signoff.

Play 4: Illustrated Rates
At the August 6 meeting, Slutsker broke the issue of illustrated rates into three separate plays: (a) whether to permit hypothetical index returns at all; (b) how to treat nonguaranteed elements; and (c) other illustrated rate scenarios.

The group focused on the hypothetical index returns play, because that’s where the proprietary backcasted indexes driving this inquiry line up. Working group members noted that even in states with current Model #245’s 10-year history rule for indexes to be illustrated, some companies interpret this as permitting newer indexes to illustrate so long as the index’s underlying components individually have 10 years of history.

The Indexed Annuity Leadership Council argued that newer indices should still be eligible to play, provided the right guardrails are in place — a read backed by Elston.

William Carmello, chief life actuary at the NYDFS, argued for the most aggressive defense, questioning whether any historical returns belong on the field, given that past performance cannot predict future results.

With preliminary consensus on illustration length, disclosures, and accountability reached, two of the toughest calls in the game are still to be decided — how illustrated rates of return should be addressed and what the stopgap solution in implementing a revised Model #245 should look like.

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