This updates our March 24, 2010 blog posting.

The National Association of Insurance Commissioners ("NAIC") issued a press release on October 12, 2011 announcing, among other things, adoption of a bulletin (the "Bulletin") regarding stranger originated annuity ("STOA") transactions. STOA transactions involve a producer and/or investor offering a third party a fee for the use of the individual’s identity as the annuitant in an annuity.

The Bulletin encourages insurers to implement measures to prevent or limit STOA, such as:

  1. Reviewing commission chargeback provisions and considering adjusting commissions if the facts indicate a STOA transaction;
  2. Establishing methods for detecting STOA transactions and producers who facilitate such transactions;
  3. Revising annuity applications to include questions regarding funding of the contract and the relationship between the annuitant and contract owner; and
  4. Reporting STOA transactions to the applicable department of insurance.

Click here for a copy of the press release.