Regulators talked here about updating annuity consumer protection rules.
State commissioners and others attending the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., packed a session of the Suitability of Annuity Sales Working Group on reworking the existing suitability model.
The term “suitability” covers efforts to ensure that an annuity or other product sold to a consumer is appropriate for that consumer.
Kelly Ireland, counsel for insurance regulation at the American Council of Life Insurers, Washington, noted that 38 states already have suitability regulations on the books.
The NAIC should change the model only when necessary, and “any changes need to be uniform guidance and not undo all the work that has been done to date,” Ireland said.
Ireland also asked that the language in a draft revision be modified to avoid implying that all insurers have been using inappropriate sales practices.
Joe Musgrove, an Arkansas regulator, said the NAIC has to go back and look at the suitability model.
There have been “very poor results,” Musgrove said.
“The monitoring of sales has not gone well under the existing model,” agreed Mary Beth Senkewicz, a Florida deputy insurance commissioner.
Suitability session participants talked about whether a revised model should require insurers to handle agent training or permit them to delegate the responsibility and monitor the training providers.
The National Association for Fixed Annuities, Milwaukee, supports agent training requirements, but one complication is that there are more than 6,000 types of fixed annuities, according to NAFA Executive Director Kim O’Brien.
Later, at a session of the NAIC’s Annuity Disclosure Working Group, Rosanne Mead, an Iowa assistant insurance commissioner, said she believes that the names of some annuity products, such as CD annuities and IRA annuities, are misleading.