The purpose of the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation (Model #275) is to add protections for annuity clients. Under this regulation, agents must satisfy four obligations to annuity clients: (1) care, (2) disclosure, (3) conflict of interest and (4) documentation when recommending an annuity. These obligations will be met by implementing new producer training, revised suitability forms and updated recordkeeping requirements.
Annuities are a great way to grow your business and help your clients get the most out of their retirement. Senior Market Sales® (SMS) is committed to ensuring suitable sales practices when recommending annuities as well as supporting the fair and equitable treatment of our insurance customers. Below is an executive summary of recent revisions and actions to Model #275.
NAIC Best Interest mandates that producers who engage in the sale of annuity products must complete an approved, state-specific best interest annuity training course, and insurers must verify the completion of said training before the agent can solicit the sale of annuities. The training shall include information on appropriate standards of conduct, sales practices, replacement and disclosure requirements.
Many carriers have updated their suitability forms for states that have adopted the NAIC’s revised Model Regulation. Please be sure to use the updated forms. The SMS Annuity e-App platform will have the most current forms.
Insurers, general agents, independent agencies and producers are required to maintain or be able to make available to the state insurance commissioner or appropriate regulatory body, records of the information collected from the consumer, disclosures made to the consumer, including summaries of oral disclosures and other information that was used in making the recommendations for the insurance transaction, including annuity purchases or exchanges. These records must be maintained for seven years after the insurance transaction is completed by the insurer, or longer requirements as directed by applicable state law.
Examples of maintained required records include: paper, photographic, micro-process, magnetic, mechanical or electronic media, or any medium that accurately reproduces the actual document.