The general counsel of the National Association for Fixed Annuities has some advice for state insurance regulators: Keep the word “prudence” out of any new standards for sellers of annuities,
Pamela Heinrich, NAFA’s top legal officer, included that thought in a letter commenting on efforts by the National Association of Insurance Commissioners (NAIC) to update the NAIC’s annuity suitability model regulation.
The Annuity Suitability Working Group, part of the NAIC’s Life Insurance and Annuities Committee, has posted a total of 18 letters commenting on a new suitability update draft on the working group’s section of the NAIC’s website.
The NAIC is a group for state insurance regulators. States often use NAIC models when developing their own insurance laws, regulations and consumer education materials.
Heinrich says NAFA supports efforts to improve disclosure requirements, and to improve explanations for annuity recommendations.
But NAFA opposes any provisions that might require insurance producers to get new licenses, define insurance producers or insurers as fiduciaries, or “harmonize” with the work of other regulatory bodies in ways that might harm independent annuity distributors, Heinrich writes.
Heinrich also includes a note about drafting.
She says the current working group draft states that a producer or insurer would be complying with the model regulation update if the producer or insurer were “‘[a]acting with reasonable, diligence, care, skill, and prudence.’”