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Just prior to the start of the National Association of Insurance Commissioners’ summer meeting in Washington earlier this month, I was able to catch up with an old friend who is a railroad buff.

In the course of conversation, my friend noted his son Tim’s fascination with old railroad trains. In fact, he and his son are planning a trip to ride the California Western Railroad, more colorfully known as the Skunk Train. The Skunk Train earned its name because the smell of its gas engine combined with smoke from a pot-bellied stove that kept loggers warm preceded its arrival at station stops.

He noted how his son’s taste in railroad trains differed from his more practical preference for faster, modern trains.

The contrast between speed and old-fashioned dependability and the need for both was something that also surfaced during the NAIC meeting.

The first meeting of the Interstate Insurance Product Regulation Compact Commission marked a quantum leap forward in the quest for speedier delivery of life insurance products to the marketplace. In record time, state insurance commissioners, state legislators, life insurers and producers marshaled efforts to enact a single point of product filing that will go a long way toward making the life insurance industry more competitive with other financial services sectors.

The feat was accomplished in the regulatory equivalent of bullet train speed, with 27 states hopping on board the compact in a little over two years. States in the compact represent about 41% of premium volume. The compact includes life insurance, annuities, disability income and long term care insurance products.

Now that the compact train is ready to leave the station we’ll be interested in monitoring its journey.

The NAIC also fully adopted a newer version of the Senior Protection in Annuity Transactions model regulation, more commonly known as the “suitability” model. After years of wrangling by many stakeholders over what the model should encompass and, if indeed, it was needed, regulators temporarily pulled it off the table, brainstormed and ultimately adopted a model that focused its requirements on the sale of annuities to those age 65 and over. The new version of the model extends protection to consumers of all ages.

A slower, more deliberate approach to protecting the interests of both younger and older consumers who purchase annuities is wise and welcome.

It is wise because going forward, consumers are going to be more concerned about ensuring they do not outlive income. Annuities can, if properly sold, be one way to achieve this end. Because these products are often very complex, having suitability requirements in place for all consumers becomes even more important. It is critical both to the financial safety of consumers and to the long-term reputation of the product and the industry that offers it.

This more deliberate approach by state insurance regulators is welcome because the whole effort to create suitability standards could very well have collapsed if regulators hadn’t taken the slower, gradual approach of introducing it.

Suitability protection for all consumers will help minimize the sale of annuities that are not appropriate and will hopefully free up regulators to focus their efforts and resources in other areas of compliance.

Unlike the Skunk Train, the expanded suitability protections will spare the noses of consumers and regulators from the whiff of unsuitable sales and their unfortunate consequences. Consumers making efforts to prepare for retirement can feel more secure about safely pulling into that station.


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