Last week, the National Association of Insurance Commissioners adopted important changes to its Suitability in Annuity Transactions Model Regulation. Among other things, the changes to the model regulation:

  • Clarify that the insurer is responsible for compliance with the model’s requirements, even if the insurer contracts with a third party to perform suitability reviews;
  • Require the review of all annuity transactions prior to issuance;
  • Specify what information should be collected to determine the suitability of a recommended purchase, exchange or replacement of an annuity; Specify additional duties that must be met when recommending a purchase, exchange or replacement; and
  • Establish both general and product-specific suitability training requirements for producers.

The NAIC also adopted an executive summary of the revised regulation to address questions that are likely to arise. If you sell annuities, it’s time to make sure that your existing procedures comply with the new requirements