Roughly five years and innumerable drafts later a model that regulates suitability of annuity sales was adopted by the National Association of Insurance Commissioners here.
Acknowledging that the Senior Protection in Annuity Transactions model regulation was not perfect, Mike Pickens, NAIC president and Arkansas insurance commissioner, said the model still afforded considerable protections to seniors and recommended adoption.
State commissioners approved the regulation with a nearly unanimous vote. California voted not to adopt the model with no reason given, according to a department representative voting on the issue.
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The model encompasses both fixed and variable annuities sold to senior citizens, a segment of the market that regulators say represents the group “most vulnerable” to unsuitable sales.
Amendments adopted on a closed regulator conference call just prior to the fall meeting reiterated that both companies and producers would be responsible 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 cover all consumers, Poolman said, “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 it could garner the support needed to be adopted, he explained.
The assurance followed a 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, why wouldnt they be good for all consumers, he asked.
Birnbaum also wondered 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 said the model “has been watered down to the point that there are no meaningful consumer protections in the model.”