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September 15, 2003 at 08:00 PM
NU Online News Service, Sept. 15, 2003, 6:02 p.m. EDT — Chicago
The National Association of Insurance Commissioners, Kansas City, Mo., has concluded five years of work on suitability by adopting the Senior Protection in Annuity Transactions model regulation.
The model covers sale of fixed and variable annuities to senior citizens. Regulators say senior citizens are the consumers “most vulnerable” to unsuitable sales.
The model is not perfect, but it affords considerable protection to seniors, NAIC President Mike Pickens told state commissioners before the vote.
State commissioners heard Pickens’ message and supported the model with a nearly unanimous vote. California voted not to adopt the model with no reason given, according to a representative for the department.
Amendments adopted on a closed regulator conference call just before the fall meeting emphasized that both companies and producers would be responsible for suitability and went on to specify that all producers, including captive agents and independent producers, would be responsible for the suitable sale of annuities to senior citizens. The amendments were recommended by the American Council of Life Insurers, Washington.
North Dakota Insurance Commissioner Jim Poolman, said the current model has a “realistic chance of getting adopted in the states.”
Responding to criticism that the model should include all consumers, Poolman said that “if it [the model regulation] works, it can always be amended later if other problems need to be addressed.” The model needed to be tailored so that it could garner the support needed to be adopted, he said.
The assurance followed criticism made by Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas. Birnbaum asked regulators why suitable sales guidelines focused on senior citizens. If suitable sales are good for seniors, he asked, why wouldn’t they be good for all consumers?
Birnbaum also asked why the scope of the model was limited to annuities.
All but one consumer representative signed a letter urging that the model not be adopted. The letter says the model “has been watered down to the point that there are no meaningful consumer protections in the model.”
