What is the story about?
What's Happening?
Regulators are close to finalizing guidance on compliance expectations for the best interest standard in annuity sales. The National Association of Insurance Commissioners adopted the Suitability in Annuity Transactions Model Regulation #275 to strengthen state regulation over annuity sales. The guidance addresses insurers' reliance on safe harbor provisions and third parties for supervising sales, emphasizing active monitoring and compliance verification.
Why It's Important?
The completion of this guidance is crucial for ensuring that annuity sales are conducted in the best interest of consumers. By clarifying compliance expectations, the guidance aims to enhance consumer protection and ensure that insurers and financial professionals adhere to high standards. This could lead to increased trust in annuity products and potentially impact the financial planning industry.
What's Next?
The working group has voted for a 14-day exposure for public comment before finalizing the guidance. Insurers will need to implement effective monitoring programs to comply with the safe harbor requirements. The guidance recommends practices such as written contracts, onboarding due diligence, and ongoing monitoring to ensure compliance.
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