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Keating Discusses Suitability Decision

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Members of the American Council of Life Insurers have been responding positively to the ACLI board’s decision to support broader annuity sales suitability protection.

Frank Keating, president of the ACLI, Washington, gave that assessment in an interview following the announcement of the board’s decision.

The National Association of Insurance Commissioners, Kansas City, Mo., has adopted a model regulation that sets standards for determining whether a particular annuity is suitable for a consumer age 65 or older.

In recent weeks, NAIC officials have talked about expanding the model to consumers of all ages.

The ACLI’s partnership with the NAIC on the suitability issue is important because building consumer trust in the sales process is important, Keating says.

If insurers are going to succeed at persuading Americans to save more, “there must be more interest in service,” Keating says.

Will the ACLI effort to build trust include scrutiny of equity-indexed annuities?

“To the extent that they need to be looked at,” Keating says.

But Keating emphasizes life insurers’ ability to help ground the message about the need to save in reality, by pointing out that consumers’ parents are living longer and need more income than most members of previous generations needed.

Keating cites his own family history: His great-grandfather died at 68, his grandfather at age 65 and his father at age 86.

Concern about outliving assets caused Keating’s father some “disquiet,” Keating says.

Life insurers also can work to increase Americans’ savings rate by offering products that consumers understand as well as need, Keating says.

One of Keating’s grandfathers, a retailer, used to say that putting too many items on a shelf cut sales.

That lesson illustrates the need for simplicity as well as for product innovation, Keating says.

A quicker product approval process would help, and that is one reason the ACLI is supporting an optional federal charter, Keating says.


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