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Industry Assessing NAIC Call To Expand Annuity Sales Regulation

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Life insurers still are assessing a call for state insurance regulators to extend to all age groups provisions of an annuity sales model regulation that now protects senior citizens.

The Senior Protection in Annuity Transaction model regulation, adopted in 2003 by the National Association of Insurance Commissioners, Kansas City, Mo., currently covers sales of annuities to people over age 65.

During a CEO meeting on Jan. 12 that was sponsored by the American Council of Life Insurers, Jim Poolman, North Dakota insurance commissioner, said the NAIC should expand protections of the model to all ages, not just consumers over age 65.

Poolman said his office fields many annuity sales complaints. Companies have set up systems to monitor annuity sales for consumers over age 65, so it would not be difficult to expand those systems to protect all consumers, he added.

All the information available to date suggests that the primary focus must be concern for senior citizens, said Linda Lanam, ACLI vice president-annuities. However, she continued, ACLI also recognizes that both state and federal regulators feel the matter needs to be examined further.

“We want to be sensitive to the need to protect all consumers,” she added.

“ACLI has committed to taking the issue to its membership,” Lanam said. “We will have a direct response in the relatively near future.”

In a statement, the National Association of Insurance and Financial Advisors, Falls Church, Va., said “NAIFA supports the special protections for seniors in the NAIC’s Senior Protection in Annuities Transactions model regulation because there was perceived to be abuses that warranted special attention. However, at this point it is not clear to NAIFA that a problem in the under-65 marketplace has been demonstrated.”

NAIFA added that it would wait to see a formal proposal before making further comment.

Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, said the Center would support such a change. When the model originally was being developed, he continued, CEJ had argued that protections should be offered to all consumers and not just seniors.

“It makes sense that if a model is offering certain consumer protections to one group, it would not just benefit some consumers but all consumers,” Birnbaum said.

When a model is reopened, it is important to see how it can affect all products, said Scott Cipinko, of counsel with Lord Bissell & Brook, representing the Life Insurers Council, Atlanta. In the current model, he said, annuities sold for pre-need contracts are exempted in most states. It is important that the original discussions and thought processes not be lost when a model is opened up, he added.

Holly Sheffer, a MetLife spokesperson, said, “At MetLife, we are looking through all aspects of the NAIC’s recommendations and have not taken a formal position at this time.

“Suitability is an issue with a strong connection to the senior community; however, MetLife’s strong compliance practices are in place to ensure that insurance and annuity products are suitable for all customers,” Sheffer said.

At press time, several major insurers including AXA, New York, and Prudential Financial, Newark, N.J., were not able to provide comment. Hartford Life referred National Underwriter to the ACLI.


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