A new certification program will make it easier for life insurers to track annuity suitability from third-party distributors, according to the Insurance Marketplace Standards Association, which is launching the clearinghouse system on Jan. 1, 2008.
The creation of a clearinghouse that will examine third-party providers looks at the marketplace as a whole in the examination of whether annuities are suitable, says Brian Atchinson, CEO and president of IMSA, Bethesda, Md. It establishes “an ownership and responsibility for everyone along the distribution channel [to ensure suitability].”
The clearinghouse is a response to the enactment of the Suitability in Annuity Transactions model regulation developed by the National Association of Insurance Commissioners, Kansas City, Mo., in 30 states, according to IMSA. The model regulation requires companies to get annual certifications from third-party distributors to whom they have delegated suitability supervisory responsibilities, IMSA explains.
Companies will pay a yet-to-be-determined fee to participate in the clearinghouse, Atchinson says. Companies which are not IMSA members will pay a slightly higher fee, he continues. The certifications will be housed on a Web-based platform, Atchinson says, adding that confidentiality issues have been addressed in the development of the platform.
The election of a new board of directors on October 23 reflects the need for oversight of the broader marketplace and not just in the insurance community, Atchinson says.
David Odenath, president of Prudential Financial’s annuity group, has been elected IMSA’s chairman-elect, while Scott Curtis, a senior vice president of Raymond James & Associates, has been elected to the IMSA board.