New Year, New Duties in the Sale of Annuities
It looks as if 2021 will be a busy year as states move to implement the NAIC 2020 revisions to the Suitability in Annuity Transactions Model Regulation (Model 275), or other duty of care measures. The below chart outlines the actual or proposed state activity, its status, and notable items insurers need to consider. As 2021 continues, more states are expected to revise their standard of conduct requirements.
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State
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Actual or Proposed Effective Date
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Status
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Notable Items
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Alabama
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January 1, 2021
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Introduced regulatory proposal
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Does not use the term “best interest”
|
|
Arizona
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January 1, 2021
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Adopted
|
|
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Arkansas
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On date of commissioner’s signature
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Introduced regulatory proposal
|
|
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Delaware
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August 1, 2021
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Introduced regulatory proposal
|
|
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Iowa
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January 1, 2021
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Adopted
|
|
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Kentucky
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July 1, 2021
|
Introduced regulatory proposal
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Includes consultants
Does not exclude general communications to the public, general information and tools, or other product and sales material from the definition of “recommendation”
Eliminates subjective standards such as “reasonable basis” and “reasonably appropriate”
Requires insurer to maintain records of the information collected from the consumer
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|
Maine
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Not known
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Introduced regulatory proposal
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Requires consumer signature on each page of disclosure document
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Michigan
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Six months after enacted into law
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Bill in process
|
|
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Nevada
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Not known
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Introduced regulatory proposal in 2018, but refreshed proposal in 2020
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Different structure than NAIC Model
Includes prudence
Slightly different consumer information to be obtained, including whether potential surrender charges, tax implications, and penalties could be incurred in connection with the funds used to purchase the annuity
Requires training on financial exploitation of seniors and other vulnerable adults
Requires establishment of supervision system by producers
Safe Harbor limited to compliance with FINRA
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|
Ohio
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Six months after enacted into law
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Introduced regulatory proposal
|
|
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Rhode Island
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April 1, 2021
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Adopted
|
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