NU Online News Service, Feb. 24, 4:33 p.m. – Representatives for the American Council of Life Insurers, Washington, and SpreadtheRisk.org, Kansas City, Mo., a major insurance consumer Web site, are expressing mixed emotions about the new suitability draft that was released Friday by the National Association of Insurance Commissioners, Kansas City, Mo.
Michael Lovendusky, ACLI’s senior counsel, says that insurers are still reviewing the draft but that the draft appears to include “the good, the bad, and the ugly.”
Kevin Hennosy, publisher of SpreadtheRisk.org, says he is glad that regulators made efforts in the draft to go after violations in the senior market, but that he wishes regulators were doing more to protect the larger population and make insurers share responsibility for suitability with producers.
The draft, called the Senior Protection in Annuity Transactions model regulation, provides a model regulation for states that want to protect consumers from buying life insurance and annuity products that fail to suit their needs.
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An NAIC working group developed the new suitability draft after an earlier suitability draft, called the Life Insurance and Annuities Suitability model, ran into opposition from insurers, producers, consumer advocates and some regulators.
Some critics complained that the earlier draft was too broad, and others said it put too much of the responsibility for ensuring suitability on the shoulders of producers.
The new draft focuses more on ensuring uniformity and protecting unusually vulnerable consumers, such as senior citizens, officials say.
The NAIC will give members of the public a chance to talk about the draft in March, in Atlanta, at the NAIC spring meeting.
At the ACLI, Lovendusky says that the good part of the new draft is the focus on the senior market, the bad part is the inclusion of variable annuities, and the ugly part is the NAIC’s goal of adopting the model at its summer meeting in June.