NAIC Working Group Set to Hammer Out Annuity Sales Model Reg

The working group’s model regulation project would create a successor to the former Suitability in Annuity Transactions Model Regulation.

Draft Details

Of interest, the new draft regulation refers to “consumer profile information.” The profile information would include not only the consumer’s age, annual income, financial objectives and the like, but also the consumer’s liquid net worth and risk tolerance, as well as the consumer’s willingness to accept non-guaranteed elements in the annuity, including variability in premium, death benefit or fees.

Also, the new draft  defines a “material conflict of interest” as the financial interest of the producer — or the insurer where no producer is involved — in an annuity sale that a “reasonable person would expect to influence the impartiality of a recommendation.”

The Working Group, the DOL and the SEC

The working group won’t have something ready to adopt in San Francisco, but it will be looking for some more guidance from leadership. The goal is to have something to use in conversations with the SEC, noted someone familiar with the process.

Once the NAIC has approved a model regulation, it’s up to individual states to take the legislative and regulatory actions needed to implement the model.

Cameron said earlier this year that he and Iowa Insurance Commissioner Doug Ommen, vice chair of the working group, met with Labor Secretary Alexander Acosta and SEC Chairman Jay Clayton to talk about the NAIC’s progress on the issue, according to NAIC meeting minutes.

Cameron said he and Ommen stressed the NAIC’s intention to work with federal agencies “to develop a uniform, consistent standard across all annuity product sale platforms regardless of product type.”

— Read Life Agents Should Not Face ANY Best Interest Standard: Annuity Group, on ThinkAdvisor.

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