New Suitability Alternative Being Circulated Among Insurers
A new proposal to establish suitability guidelines is being circulated among life insurance and annuity companies and could be submitted as an alternative to a draft model on suitability that regulators are planning to vote on.
A vote on the Life Insurance & Annuities Suitability model act and model regulation at the “A” committee is scheduled to take place during the summer meeting of the National Association of Insurance Commissioners this June in Philadelphia.
The controversial model is being opposed by insurers, producers and consumer representatives.
NAIC President Terri Vaughan has said it is the intent of regulators to vote on a suitability model and unless an alternate was proposed, it would be the present NAIC model.
The alternative model developed by Allianz Life Insurance Company of North America in Minneapolis, will be submitted to the NAIC for consideration if it receives broad support, according to Hugh Alexander of the Alexander law firm, Denver.
Initial reaction is “pretty favorable,” he says. The current draft of the alternative model calls for insurance producers who “sell, solicit or negotiate individual fixed life insurance policies or individual annuity contracts” to make “reasonable efforts to determine the consumers insurance objectives, insurance needs and financial objections.”