Insurance commissioners put 'suitability in annuity' rule on hold

A new regulation that would have placed more responsibility on life insurers for producers' bad annuity sales has been delayed. The National Association of Insurance Commissioners' new draft of the Suitability in Annuity Transactions Model Regulation was supposed to be considered by the group's Life Insurance and Annuities Committee at the NAIC's winter national meeting this week in San Francisco. The group has held off on considering the draft until Dec. 18, however, when it will convene on a conference call. The proposed changes to the rule place more responsibilities on life insurance companies, calling on the carriers to set standards for producer product training, to review each annuity recommendation to ensure suitability and to sniff out unsuitable recommendations. Those duties currently fall in the hands of broker-dealers. Additionally, insurers would be responsible for ensuring that their producers comply with the rules. Just last week, the draft regulation came closer to passage when the NAIC's Suitability of Annuity Sales Working Group approved the draft model by a 13-to-2 vote, with insurance regulators in California and Ohio agreeing that the model rule needed more work.