Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Life Insurance

NAIC Defers Suitability Vote

By Jim Connolly

X
Your article was successfully shared with the contacts you provided.

NU Online News Service, June 12, 10:23 a.m. — Philadelphia

Regulators here for the summer meeting of the National Association of Insurance Commissioners deferred a vote Tuesday on the Life Insurance and Annuities Suitability Model Act and a related model regulation.

The same insurers, producers and consumer representatives who have been fighting the model act and regulation for the past two years continued their attacks at a Life “A” Committee session, and regulators weighed in with questions of their own.

The NAIC suitability proposals deal with the steps producers and insurers must take to ensure that the products they sell suit the needs, finances and risk tolerance levels of the purchasers.

The NAIC, based in Kansas City, Mo., has no direct legislative authority, but state legislatures and insurance regulatory agencies often follow its lead when developing laws and regulations.

North Dakota Insurance Commissioner Jim Poolman asked whether one controversial suitability issue, concerns about questionable replacements of existing life insurance policies and annuity contracts, has something to do with the fact that producers often get compensated up front.

“This is stuck in my craw and my department’s craw,” Poolman said. “Is the new push for a suitability model driven by a compensation system that drives to sell, to close the deal?”

But Scott Cipinko, executive director of the Life Insurers Council, Atlanta, said an existing replacement regulation was supposed to address that issue.

Cipinko also supported an argument made earlier by Michael Lovendusky, a representative for the American Council of Life Insurers, Washington, and Ron Panneton, a representative for the National Association of Independent Financial Advisors, Falls Church, Va., that the states can already use existing regulatory tools, such as the Unfair Trade Practices Act model law, to regulate suitability.

Kevin Hennosy, a consumer advocate with Spread the Risk Inc., Kansas City, Mo., said the proposed NAIC suitability measures place too much emphasis on agents and not enough emphasis on companies.

Exemptions in the model would encourage companies to move toward direct sales, away from traditional life insurance sales strategies, Hennosy added.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.