Suitability of insurance product sales is an issue that can, as the industry has seen over the course of several years, excite fierce passions on every side.

However, in a refreshing turn of events in this long-running saga, there are hints that on the issues second go around–suitability of annuity sales to seniors–more light than heat is being generated. This is to the potential benefit of consumers and, ultimately, the industry.

Some constructive observations and suggestions are being raised in discussions with regulators at the National Association of Insurance Commissioners who are hoping to adopt a regulation at the summer meeting this June.

Wed like to give a tip of the hat to the following:

The Life Insurers Council for its practical suggestion of using an existing NAIC Annuity Buyers Guide to monitor suitability of sales.
Consumer advocate Birny Birnbaum for his suggestion that focusing on actual gaps in regulation will facilitate an appropriate regulatory solution.
Arkansas Deputy Commissioner John Hartnedy for taking the time to find out what kind of suitability issues are turning up in the consumer complaints division of his department.
Utah Commissioner Merwin Stewart for his measured and fair solicitation of opinion from all sides.

For all this, its still not hard to imagine the debate on suitability turning into a reprise of the previous arguments. But if the discussion can continue in its current constructive tone, as exemplified by those noted above, then suitability stands a good chance of being resolved in a way that is acceptable to all parties.


Reproduced from National Underwriter Edition, May 5, 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.