The National Association of Insurance Commissioners has approved a newly revised Suitability in Annuity Transactions Model Regulation that would require financial professionals to act in the best interests of consumers when recommending annuity products.
NAIFA supports the model regulation, which requires financial professionals and carrier companies to act with “reasonable diligence, care and skill,” and urges states to adopt the measure as quickly as possible. NAIFA members agree to abide by a Code of Ethics requiring them to work in their clients’ best interests.
“This rule provides good, common-sense protections for consumers and avoids unintended consequences that could prevent agents and advisors from effectively serving the best interests of their clients,” said NAIFA CEO Kevin Mayeux. “Annuities are an important part of many people’s financial plans, and it is important that state laws and regulations serve to make consumers comfortable with annuity products and the sales process without placing barriers between insurance and financial professionals and their clients. NAIFA applauds the NAIC for their hard work on this revised model.”
NAIFA worked with the NAIC to ensure the new model provides abundant consumer protection and preserves consumer choice by allowing them to obtain annuity products under commission-based compensation arrangements. The NAIC also adopted some NAIFA-suggested changes to paperwork producers would be required to complete.
The NAIC model provides a standard rule for states that aligns with the Securities and Exchange Commission’s federal Regulation Best Interest and could help prevent a mishmash of confusing and potentially contradictory state regulations.
“NAIFA has the perfect structure and record of state-level advocacy success to promote the new NAIC annuity suitability model in every state,” Mayeux said. “NAIFA’s state-level advocacy is second-to-none, and getting the new model accepted and implemented by state regulators will be one of our priorities moving forward. It’s a win-win proposition for NAIFA members and the Main Street USA consumers they serve.”