January 22, 2020 No comments

NAIC Executive Committee To Meet Feb. 13 On Annuity Sales Rule

The National Association of Insurance Commissioners creates model laws for states to pass.

The NAIC Executive Committee and Plenary will hold a joint meeting on Thursday, Feb. 13 and could vote to adopt new annuity sales rules.

The meeting is scheduled for approximately 45 minutes and is open to the public, an NAIC news alert said.

Executive Committee and Plenary adoption is the final step before the updated Suitability in Annuity Transactions Model Regulation is sent to the states for consideration.

The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation.

The new regulations will commit the agent to extra work and documentation to establish the consumer's profile. Agents will need to find out and document things like a consumer's financial situation, insurance needs and financial objectives.

The rule specifically does not establish a fiduciary duty, nor does it ban agents from recommending products with a higher compensation structure. But the agent must be able to show that such a recommendation is in the consumer's best interest.

The Life Insurance and Annuities (A) Committee adopted the final revisions to the model during a Dec. 30 conference call. That vote was 11-1 with New York cast the lone No vote without comment.

New York adopted its own tough standards that took effect for annuity sales on Aug. 1, 2019 and for life insurance sales on Feb. 1, 2020. New York regulators have repeatedly pushed the NAIC for tougher annuity rules and to cover life insurance sales as well.

NAIC regulators have mostly ignored New York's suggestions.

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.