NAIC Approves Annuity Suitability Model
The National Association of Insurance Commissioners (NAIC) approved a model regulation on Feb. 13 requiring insurance professionals to act in the best interests of their customers when selling annuities.
The NAIC says the Suitability in Annuity Transactions Model Regulation would prohibit insurance agents and carriers from putting their own financial interests ahead of the interests of the consumer and require them to act with “reasonable diligence, care, and skill” in making recommendations. Broker-dealers that sell annuities will be in compliance with the NAIC rule if they are in compliance with the Securities and Exchange Commission’s Regulation Best Interest rule.
“These changes underscore the commitment of U.S. insurance regulators to protecting consumers purchasing annuities,” said NAIC President and South Carolina Insurance Director Ray Farmer. “Nearly every state has adopted the model, which has been protecting consumers for 15 years. I encourage my colleagues to work with their legislatures to pass these updates to provide even stronger protection.”