Three days before a vote was scheduled to be taken by regulators, last minute discussions hammered out compromise language for a model regulation on suitable sales of annuities to senior citizens.
But final changes to the proposed regulation are still raising concerns over whether insurers and consumer advocates should be left out of a conversation on a draft shortly before it is considered for adoption.
The Senior Protection in Annuity Transactions model regulation will be reviewed and possibly adopted by the National Association of Insurance Commissioners, Kansas City, Mo., at its fall meeting this week. It has been under consideration in various forms for about five years.
The discussions involved regulators and the American Council of Life Insurers, Washington.
On Sept. 11, compromise language that ACLI says it would find “acceptable” was issued by the NAIC. If the new language is included in a model that is adopted, ACLI would not oppose adoption, according to a note from Linda Lanam, ACLI vice president, annuities.
The new language states that an insurer shall either assure that a system needs to supervise recommendations reasonably designed to achieve compliance with this regulation or establish or maintain such a system.
It also states that a general agent or independent agency has to adopt an insurers system to supervise recommendations of its insurance producers or establish and maintain its own system.
The changes follow a Sept. 5 draft released after a closed meeting of NAICs executive committee, one of the bodies that could vote on Sept. 14.
Interested parties maintain that the lack of time to review changes underscores the need for decisions to be conducted in open session.
At press time, NAIC released a statement saying the committee had decided to make technical changes after considering whether to take action on more substantive changes. Mike Pickens, president of the NAIC and Arkansas commissioner, was out of the country and unavailable for comment.
Conceptual issues raised by the ACLI include the need to include variable annuities in a model that originally focused on fixed annuities as well as a requirement that insurers create “a system to supervise” the recommendations of producers. The letter, written prior to the newest language, states that if VAs come under the model, then it is important broker-dealers be included in the model since VAs are distributed by their registered reps.
Lanam says the ACLI accepts for purposes of this model that VAs are going to be included under its scope. However, it is important that broker-dealers have a system in place to regulate these products, she adds.