The NAIC Life and Annuities (A) Committee recently adopted the frequently asked questions (FAQs) regarding the best interest model adopted by the Committee in February of 2020. As most NAIFA members by now already know, the updated model clarifies that all recommendations by agents and insurers must be in the best interest of the consumer and that agents and carriers may not place their financial interest ahead of the consumers’ interest in making a recommendation. In addition, the model now requires agents and carriers to act with “reasonable diligence, care and skill” in making recommendations.
The FAQs adopted by the Committee will help clarify expectations for producers in those states who have adopted the Suitability in Annuity Transactions Model Regulation (#275) and assist in the uniform implementation and enforcement of its provisions across all NAIC member jurisdictions. However, no provision of this FAQ document is intended to supersede the specific language in Model #275, and there is no requirement for states to use the FAQs. To date, 15 states have adopted the model revisions.
The Committee also adopted the valuation manual amendments, with only New York opposing due to financial solvency concerns.
NAIFA was a key voice during the model update discussions and offered valuable recommendations to the FAQs that were adopted. Ensuring the adoption of the model across all states remains a priority for NAIFA’s Government Relations team.