NAICs Latest Suitability Effort Elicits Mixed Reactions
Regulators latest effort to ensure suitable annuity sales to consumers is receiving general approval for its focus on the senior market. But insurers, producers and consumer advocates say they are still in the early stages of reviewing the new document.
Released on Feb. 21 by the National Association of Insurance Commissioners, Kansas City, Mo., the draft Senior Protection in Annuity Transactions model regulation and act takes a narrower focus than a previous draft that looked at suitability more broadly.
The previous effort was opposed by all three of these constituencies as well as some regulators.
A discussion of the new draft will be held during the spring NAIC meeting which starts on March 8. The session, to be held on March 11, is a preliminary step to a planned final adoption during the summer NAIC meeting in June.
An initial review suggests a case of “the good, the bad, and the ugly,” says Michael Lovendusky, senior counsel with the American Council of Life Insurers, Washington.
The “good” news, he says, is that after four years of discussing suitability, the NAIC has focused on the heart of the problem–the senior market.
The “bad,” he adds, is that regulators have included variable annuities, which are “already heavily regulated at the federal level.”
Additionally, they chose age 65 as the cutoff for a “senior” without a discussion of the issue, Lovendusky says. There has also been no cost benefit analysis, he adds.
The “ugly” part, he says, is that the model is intended to be adopted by the summer meeting in June, a short time span.
It is good news that regulators are addressing the senior market where there seems to be a problem, according to Ron Panneton, associate general counsel with the National Association of Insurance and Financial Advisors, Falls Church, Va. Panneton declined to comment on details of the new model until NAIFAs staff has reviewed it further.