New NAIC Annuity Suitability Model Regulation and Its Impact on Carriers and Distributors
The National Association of Insurance Commissioners recently introduced new model regulations for insurance carriers and distributors of fixed deferred and immediate annuities. Find out what the regulations mean and which states have implemented the regulations so far.
The National Association of Insurance Commissioners (NAIC) introduced model regulation related to annuity suitability as well as required training for insurance carriers and distributors of fixed deferred and immediate annuities.
Many states have already begun implementing new regulations based on the NAIC model (see table below). Here is an overview of the model regulation changes.
- All producers must complete, at minimum, an approved four-hour continuing education (CE) training course on selling annuities. This training must be done before any applications are submitted otherwise the applications will be rejected. Some states already have implemented this requirement. Where implemented, carriers must track information and ensure that producers have taken the training before they can accept or issue annuity business.
- All producers must take company-specific product training before selling a carrier’s annuity products. This training must be done before any applications are submitted otherwise the applications will be rejected.Carriers must offer training on their products and track those producers who have completed the training before accepting new business applications.
- Additional information may be required on annuity suitability forms. Carriers, must review distributor suitability forms to ensure they meet the additional requirements.
- As it stands today, several states have adopted the training portion of the regulation or are making plans to adopt the model regulation in some fashion, with more states likely to follow