NAIC Suitability Debate Called A Balance Of Need And Pragmatism
Discussions among insurance commissioners suggest that there is recognition of a need for sales suitability oversight, according to National Association of Insurance Commissioners President Terri Vaughan.
The merits of the Life Insurance and Annuities Suitability model act and regulation will be debated next month during the summer NAIC meeting prior to a decision on whether or not to advance them.
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The issue has been hotly debated for two years and the NAIC hierarchy as well as a large number of commissioners are weighing in on the issue.
It is a “challenge” balancing this need with the possibility of advancing a model that would not be adopted in the states, she adds. “That would not be useful to the process,” Vaughan says.
However, the Iowa commissioner also notes that the suitability regulation that has been effective in her state since 1997 is “a good thing for Iowa consumers.”
Vaughan says that one misconception that surrounds the issue of suitability is that it is “the answer to life insurance sales practices. It is a tool, not the answer.”
Utah Commissioner Merwin Stewart, acknowledged that commissioners have been heavily lobbied by those opposed to the model and promised that the issue would receive an “open discussion” during the “A” committee meeting he chairs.