A key state insurance regulator group adopted a list of FAQs today in an effort to persuade more states to adopt new annuity sales rules.
The Life Insurance and Annuities Committee, a group within the National Association of Insurance Commissioners, adopted the FAQs with little comment. A working group spent much of the past year creating the informational questions and answers.
In February 2020, the NAIC adopted an update to the Suitability in Annuity Transactions rule that articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. With the outbreak of COVID-19, states were slow to adopt the update in the months that followed.
The NAIC began lobbying state officials last summer, and began work on a series of FAQs to help facilitate adoption. Since then, several states have adopted the new rules, said Iowa Insurance Commissioner Doug Ommen.
Fifteen states have adopted annuity sales rule update, and four more are considering it, he added.
"This FAQ document has proven valuable as those states have moved forward," Ommen said.
The NAIC model rule specifically does not establish a fiduciary duty, nor does it ban agents from recommending products with a higher compensation structure. Consumer advocates say the rule has no teeth and falls well short of true consumer protection.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.
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