With a big push from the leadership at the National Association of Insurance Commissioners, regulatory guideposts for the suitability of annuity sales to seniors could be in place by fall.
Discussions among regulators, insurers and producers during the summer NAIC meeting here suggested consensus on wording was within reach.
Final wording will be prepared in anticipation of voting the Senior Protection in Annuity Transactions model regulation out of the Life & Annuities “A” Committee in the next two weeks and fully adopting the model by the fall meeting in September, according to Utah Insurance Commissioner Merwin Stewart, who is the “A” Committee chairman.
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The intention of NAIC leadership to bring nearly five years of debate to a close was made clear by Mike Pickens, NAIC president and Arkansas commissioner. Regulators all know of cases where seniors have been sold unsuitable products in their states, Pickens said, and “long overdue” action that “first and foremost protect(s) vulnerable seniors out there” would be undertaken.
“Congress wants to hear something from usIt is time to act,” he said. “It is time to act just as soon as we can.”
Rep. Michael Oxley, R-Ohio, and chairman of the House Committee on Financial Services, spoke to insurance commissioners at the meeting about what kind of strides state regulators were making in achieving regulatory efficiency.
Oxley told National Underwriter state regulators “have made progress but still have a long way to go.”
As detailed in the model, the purpose of the suitability regulation is to “establish standards and procedures for recommendations to senior consumers that result in a transaction involving annuity products so that the insurance needs and financial objectives of senior consumers at the time of the transaction are appropriately addressed.”
The model states “it shall not be construed that there is a private cause of action for a violation of this regulation.”
It applies to recommendations by an insurer or an insurance producer resulting “in a transaction or series of transactions involving a senior consumer on the purchase of an annuity that results in another transaction or series of insurance transactions.”
The latest effort to finalize broadly acceptable suitability standards started with a discussion of how an insurer would ensure its producers comply with suitability standards.