Model regulation governing the suitability of life insurance and annuity sales advanced toward full adoption at the spring meeting here of the National Association of Insurance Commissioners.
The one area of agreement among companies, producers and consumer advocates is that they dont like the life insurance and annuities suitability model act and accompanying model regulation, interviews with National Underwriter suggest. As one person put it, “This thing needs to die.”
Before the vote to expose the model for three months before it is voted on at the NAIC meeting in June, NAIC President Terri Vaughan acknowledged the widespread dislike, but said she believed suitability regulation is needed and will be realized by NAIC.
Besides Vaughan, Nat Shapo, Secretary-Treasurer and Illinois insurance commissioner, and Lee Covington, Ohio insurance commissioner, called for strong support for the model.
Carroll Fisher, Oklahoma commissioner, in a strongly worded opposition, said he would continue to oppose the model and lobby to defeat it.
“I am told agents dont like it, companies dont like it and consumer advocates dont like it,” Vaughan said. It is likely that “A” committee will be lobbied to reject it, she added.
But she made it plain that she would pursue full adoption of the model. “Those opposing the model had better be very energetic in the next three months to create something else that is acceptable. I will be voting in favor of something in June.”
Vaughan noted the suitability working groups hard work that started four years ago with a decision to develop a white paper and a survey that indicated five states had already taken action on suitability and many other states were planning similar action.
The same need exists today, she added, noting that a single model would bring uniformity to states approach to the suitability of sales.
But Fisher thought otherwise. “It will never pass in Oklahoma because I will never bring it before the state legislature.”
Were he to do so, Fisher said, there would be an “uprising” of agents. And, he continued, companies could not be blamed for opposing regulation that would hold them responsible for suitability when there was no tie to them at the point of sale.
While voicing his adamant opposition to the model, Fisher said he is an agent and he views being an agent as “a sacred right to serve the people of Oklahoma.” For any agent in the state that violates that trust, “I will get them out of the business,” he vowed.
Reproduced from National Underwriter Life & Health/Financial Services Edition, March 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.