KANSAS CITY – The National Association of Insurance Commissioners’ working group adjourned on Friday with what some called a framework for an annuity transaction model law after a day and a half of heated debate.
Much of the discussion during the half-day of discussion on Friday focused on documentation. Iowa’s conservative language won out as it had during Thursday's deliberation, but not entirely. The liberal faction led by New York gained a concession with language requiring the producer to disclose the basis for any new recommendation to the consumer.
The Annuity Suitability Working Group spent the morning taking more straw poll votes as Chairman Dean Cameron of Idaho led the group through a line-by-line review of its annuity transactions model law.
James Regalbuto of New York pushed for tougher documentation on annuity recommendations.
“If it’s a ‘he said, she said,’ whoever can produce enough notes to document their experience is going to win,” he said. “So if there’s an issue down the road, we can say ‘OK, show us the documentation where you made this recommendation.’”
The New York idea includes a cost-benefit analysis to be folded into the recommendation, as Regalbuto described it.
The tough New York language – which is a part of the state’s own best interest rule – generated “serious concerns” from Wesley Bissett, senior counsel for government affairs for the Independent Insurance Agents and Brokers of America.
“You would have agents in this space literally doing nothing but crafting responses and not knowing what would be required,” he said.
Many agents have CRM systems that make simple ongoing documentation rather easy, Regalbuto countered. As he did Thursday, Birny Birnbaum, executive director of the Center for Economic Justice, lined up behind New York.
“It seems like it will in fact reduce a lot of misunderstandings and disagreements,” he said. “And it will empower the consumer in a way that they are not empowered today.”
'Shouldn't Be A Part'
But the working group was not ready to go that far. Nor were they willing to take a hard line with trips and other incentives awarded to agents for reaching sales goals.
Jodi Lerner of California proposed rule language barring agents from profiting from those incentives.
“If you’re going to move to a best interest standard, prizes based on targeted sales goals shouldn’t be a part of that,” she said.
The group tabled the language after Cameron pointed out it wasn’t clearly articulated. Cameron made it clear he does not support a ban on incentives.
“I don’t know that a targeted sales goal necessarily influences anything,” said Cameron, Idaho insurance commissioner. “I know that anything that I’ve accomplished in life came with setting goals.”
The working group broke up 45 minutes early, with Cameron pointing toward the NAIC Summer Meeting Aug. 4-7 in Boston as a goal to report out a model law to the A Committee. The group might do a telephone conference call at the end of June if needed, he added.
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.
© Entire contents copyright 2018 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.