Members of the committee at the NAIC, Kansas City, Mo., made
the decision Wednesday during a conference call meeting.

The NAIC executive committee and the plenary, the body that
includes all voting NAIC members, could vote on final approval of model
revisions at the NAIC’s upcoming summer meeting, NAIC officials say.

The committee took no action on a proposal to look into
creating a mechanism employers could use to roll existing corporate-owned life
insurance (COLI) policies into new COLI policies through tax-free Section 1035
exchanges.

An NAIC staffer had suggested that some employers may be
trapped owning bad COLI policies because they have no practical way to meet COLI
participant notice requirements and meeting insurable interest requirements when
replacing an existing policy.

Insurance industry groups argued that Internal Revenue Service
guidance could lead to negative tax consequences for employers that trade in
COLI policies, and that this is a bad time to consider revising insurable
interest laws.

– Rory Banim