Georgia Insurance Commissioner John W. Oxendine has issued a new regulation requiring insurance companies and agents to sell annuities only when certain they are right for a client.
Oxendine says he released the new regulation, 120-2-94, in response to complaints from some consumers that they were sold inappropriate annuities.
The rule requires the insurer or agent to have justifiable reason to believe a recommended annuity fits in with the buyer’s other investments, financial situation and other insurance coverage.
If a consumer thinks a purchased annuity violates the suitability requirements, the Commissioner could order the insurer or agent to take remedial steps.
The regulation also requires insurers or agents to set up a system that assures compliance with its provisions, including written procedures and regular reviews of sales records. It calls for insurers and agents to keep for 10 years information used to make recommendations to an annuity buyer.
Speaking the day after Georgia voters decisively reelected him as Insurance Commissioner, Oxendine said his department had received a number of complaints not only from consumers but from agents as well, charging some insurers and agents had sold unsuitable annuities.
“That’s why we cracked down,” he said. “You don’t sell a 20-year fixed annuity to someone who’s 70. There were also a lot of situations where clients were talked into changing [annuity] products, simply as a way to get commissions out of folks.”
The new rules assure that when dealing with annuities, agents and insurers will need to consider the customer’s age, net worth and total assets together, Oxendine says.
“Senior citizens are some of most vulnerable people,” he explained. “They’re often trusting and have money, and someone who’s slick-talking can easily gain their confidence.”
Oxendine proudly noted his victory over Democratic opponent, Guy Drexinger, marked the first time in Georgia history that a Republican was elected 4 times to any statewide office.
One count showed him leading by 1.3 million votes to 667,000, or 65% to 35%–a bigger margin than was achieved by the Republican candidate for governor, Sonny Perdue, who won by a 58% margin.