Regulators Outline Their Notion Of Suitability
The following are some details of the draft of the Senior Protection in Annuity Transaction model act and regulation developed by the National Association of Insurance Commissioners.
Annuities include fixed and variable contracts that are individually solicited whether as an individual or a group annuity.
The scope of the model focuses on “any and all recommendations” by an insurer or an insurance producer involving a consumer aged 65 or older on the “sale, surrender or other disposition of an annuity.”
Regulators define recommendation as “advice by an insurer or an insurance producer to a consumer on an insurance transaction. A recommendation includes information given to a consumer that induces or tends to induce a consumer into an insurance transaction.”
Additionally, the draft states that an insurer is responsible for implementing steps to assure that the insurer and its insurance producers comply with “standards, guidelines, procedures and data collection processes” required by the model.
A section of the draft addresses mitigation of responsibility for both insurer and producer. It focuses on prompt remedial action after the violation is identified.
The complete text is available at NAIC.org.
Reproduced from National Underwriter Edition, March 3, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.