NAIC Suitability Model Regulation – Chicago Revision Meeting Report

    View Authors November 2018

    On October 22 and 23, 2018, the Annuity Suitability (A) Working Group (Working Group) of the National Association of Insurance Commissioners (NAIC) met in Chicago to revise the Suitability in Annuities Transactions Model Regulation (#275) (Model Regulation).

    The current Model Regulation, as adopted in a majority of the states, requires insurance agents to collect personal and financial information from consumers and document that annuity sales are suitable to the consumer’s needs and financial objectives. Over the past several years, the Model Regulation has received mounting criticism as being inadequate to protect consumers from questionable annuity sales. In this regard, consumer advocates and others, including state and federal governments, have proposed to require that agents disclose conflicts of interest and act solely in the consumer’s best interest.

    The suggested revisions to the Model Regulation are expected to be presented to the NAIC Life Insurance and Annuities (A) Committee at the NAIC’s meeting in mid-November in San Francisco, in the aim to establish best interest standards that apply across all annuity and securities sales.