The National Association of Insurance Commission has revised an annuity consumer protection model and announced plans to hold hearings on the growing secondary market for annuities.
Members of the NAIC, Kansas City, Mo., voted this week at the spring meeting in Denver to adopt revisions to the Suitability in Annuity Transactions Model Regulation.
The underlying suitability model requires annuity sellers to verify that the annuities sold to consumers suit the needs of those consumers. The changes to the model:
- Clarify that the insurer is responsible for compliance with the model’s requirements, even if the insurer hires another entity to help with compliance.
- Require the review of all annuity transactions.
- Establish both general and product-specific training requirements for producers.
The NAIC’s Life Insurance and Annuities Committee developed the changes. State regulators and legislatures are responsible for implementing the model revisions.
The Center for Economic Justice, Austin, Texas, has argued that the NAIC should have used a more open process to develop the model revisions, but it has expressed strong support for the idea of having insurers take responsibility for the issuance of suitable recommendations, and not just responsibility for having a supervisory system in place.
The American Council of Life Insurers, Washington, has praised the NAIC goal of adopting strong, uniform annuity suitability standards throughout the United States.
But the new NAIC model revisions “will further this shared goal of uniformity only if state interpretation and implementation is consistent,” the ACLI says. “Therefore, we look forward to continuing to work with the NAIC to further develop appropriate interpretive guidance that promotes uniform adoption of the revised suitability model and ensures that the oversight of annuity recommendations is consistent across states.”
The National Association of Insurance and Financial Advisors, Falls Church, Va., is still reviewing the model update, but “we in principle think it’s important and enhances protections for consumers,” NAIFA Senior Counsel Ron Panneton says.