Some consumer groups have cited life and annuity agent abuse of professional designations as a major threat to retirement savers.
Few state or territory insurance regulators say they have seen much abuse of financial services credentials in their jurisdictions.
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The Promoting Appropriate Sales Practices in Life Insurance & Annuities Working Group, an arm of the National Association of Insurance Commissioners, recently conducted a regulator survey to explore the extent of the problem.
The NAIC is a group for the insurance regulatory agencies in states, the District of Columbia, and territories such as Puerto Rico. It cannot change member jurisdictions change their insurance laws or regulations, but the member jurisdictions often use NAIC models as examples when writing their own laws and regulations.
The current model for regulation of use of professional designations in sales of life insurance and annuity products, Model 278, applies only to use of designations in efforts to sell products to people ages 65 and older. Some consumer groups and regulators have argued that the NAIC should extend the model to cover financial professional abuse of professional designations in sales of products to people under 65.
Regulators in just 24 of the 56 NAIC member jurisdictions sent in completed questionnaires.
In those 24 states, just 22 answered a question about whether they had heard complaints about use of professional designations associated with life and annuity sales in the last two years.
Only four of the 22 jurisdictions that answered the question said they had received recent complaints about professional designation abuse.
Just one of 19 jurisdictions said limitations in a state law or regulation based on Model 278 had led to problems with taking action against an insurance producer license holder who had abused a professional designation.
The NAIC panel also asked jurisdictions whether the NAIC should extend Model 278 — the professional designations abuse model — to protect consumers under 65. Twenty-three jurisdictions answered that question.
Although known problems with professional designation abuse were rare, nine of the 23 jurisdictions, or 40%, said they thought the NAIC should look into having Model 278 apply to all consumers, not just to consumers ages 65 and older.
The NAIC’s appropriate sales practices panel posted a copy of the professional designations survey analysis report here.
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