Regulators Vow To Push Out Annuity Sales Model Law By December – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Washington Wire
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Annuity News
Washington Wire RSS Get our newsletter
Order Prints
August 5, 2019 Washington Wire No comments
Share
Share
Tweet
Email

Regulators Vow To Push Out Annuity Sales Model Law By December

By John Hilton InsuranceNewsNet

NEW YORK -- State insurance regulators moved briskly through four topics Saturday as they try to thread the needle between suitability and fiduciary in crafting an annuity sales model law.

Annuity Suitability Working Group chairwoman Jillian Froment urged members to maintain that pace as she outlined a schedule to produce a draft model "by mid-September."

That will be followed by "a very aggressive call schedule" to complete the annuity sales model by the National Association of Insurance Commissioners' Fall Meeting in December, Froment added.

The working group met in the state where a tough best-interest standard took effect Thursday for the sale of annuities. New York regulators are pushing colleagues to adopt its standard, which also covers life insurance, as the national model.

But there is plenty of resistance, which isn't likely to go away, Froment acknowledged.

"What best interest means to us as a working group does not mean that every state around the table will support that," she said. "We’ve already established that it’s going to be less than a fiduciary standard, but is more than suitability. That’s what our goal is -- to define what that means."

The group moved through four key phrases in one hour.

Care Obligation

The first two phrases under the care obligation were discussed together:

  1. Reasonable basis to believe consumer would benefit from features of annuity.
  2. Reasonable basis to believe product as a whole would address consumer’s needs.

Birny Birnbaum, executive director of the Center for Economic Justice, offered alternative language that he said better protects the consumer.

"We think the intent is that the recommendation should be in the best interest of the consumer as a whole. Not the product as a whole, but the consumer," he explained. "We think that intent is better captured with the totality of the consumer’s insurance needs."

Iowa Insurance Commissioner Doug Ommen authored much of the current draft the working group is tweaking. The "Iowa draft" was introduced earlier this summer in a bid to harmonize the NAIC effort with the Securities and Exchange Commission rule, Ommen has said.

“There are elements of suitability that are in best interest. So to say we’re going to throw out suitability to me is really getting us nowhere," Ommen said in response to Birnbaum. "We did not include the ‘as a whole’ language because we felt it was captured in the 'annuity and its features' or the 'features of the annuity' language.”

Further "wordsmithing" is needed on these phrases, Froment said.

Documentation Obligation

Obtain customer signed statement of customer’s refusal to sign profile.

Regulators struggled with how to write a standard to protect a consumer's privacy while ensuring they are informed about annuity purchases.

This phrase has many different implications, regulators noted. What if a consumer only wants a specific annuity? What if a consumer does not want to provide their financial information?

In these cases, everyone agreed the producer should not be making a recommendation. Birnbaum argued for additional consumer protections.

"Even the simplest of annuities are complex," he said. "The idea that somebody would buy something like that without any discussion with the producer, and therefore without any discussion of a recommendation, seems implausible to us.”

But Gary Sanders, vice president of government relations for National Association of Insurance and Financial Advisors, said it isn't the agent's job to be "paternalistic."

“People need to be free to do what they want," he said. “I also caution against putting too many roadblocks in place that inhibit the real-world sales process.”

The standard needs to make it clear that the insurer and the producer make a fair and reasonable effort to obtain the consumer information, Ommen said.

“There are those circumstances in the middle where the customer will give the information they want to give, but not all the information," he explained.

Supervision Obligation

Carrier only has to supervise its own products (does not have to take into account other carrier’s products).

The working group spent the least amount of time on this phrasing. Although insurers don’t have to supervise other products, that does not relieve the producer from acting in a best-interest manner, Birnbaum said.

“You do have to be aware of other products out there that may better fit the consumers needs," 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 2019 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

 

Older

NY Judge Upholds State’s Tough Annuity Sales Regulation

Newer

Analysts: LTC Hybrid Policies Will Keep Driving Life Insurance Sales

Advisor News

  • Lexington native convicted of fraud over $1 billion company faces new charges
  • PERSONAL FINANCE: Understanding wills and trusts in estate planning
  • How to master employee benefits
  • Ohio businessman guilty of investment scheme
  • Layoffs may be on the horizon. Is the unemployment insurance system ready?
More Advisor News

Annuity News

  • Prudential FlexGuard reaches $10B total sales milestone at record pace
  • Retirees can rely on annuities as a source of guaranteed income for life
  • Lottery ticket bought in Illinois wins $1.337 billion
  • Mega Millions becomes Mega Billion for Friday drawing
  • Confused by huge Mega Millions prize? Here are some answers
More Annuity News

Health/Employee Benefits News

  • North Carolina woman convicted in $34 million health care fraud scheme
  • Growing number of workers enroll in high deductible health plans
  • The Schumer-Manchin deal’s ACA provision creates another budgetary ‘cliff’
  • They wanted to stop Obamacare. They may have protected abortion rights in Wyoming instead.
  • Miami doctor sentenced in $38 million health care fraud scheme
More Health/Employee Benefits News

Life Insurance

  • How to get the most out of Life Insurance Awareness Month
  • Life application activity down in July, MIB Index reports
  • Dentist found guilty of murdering his wife for life insurance on African safari
  • Should student loan borrowers also get life insurance?
  • NCOIL resolution: certain enhanced cash surrender value endorsements are violations
More Life Insurance

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

Grow your life insurance business with John Hancock • It’s time to see how our cutting-edge solutions can help you and your clients get to know us.

Press ReleasesAll press releases

  • CybeReady Supports Security Defenses with CISO Toolkit
  • Life and Disability Income Insurance Products from MassMutual Now Available on iPipeline®’s End-to-End Digital Platform
  • Business on the Go with The Crump Mobile App
  • iPipeline® Provides Advisors Excel with Unified Path Toward Accessing Core Data Analytics in Financial Services
  • iPipeline® Adds Speed of Underwriting to Quote Engine with Ethos to Deliver Insurance to Agents in Minutes
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.