Working through the National Association of Insurance Commissioners (NAIC), state insurance regulators are making progress in developing new examination standards addressing marketing and sales practices for title, life and annuity products.
“The Market Regulation Handbook Working Group is committed to addressing the current issues in the marketplace and to ensuring that the needs of consumers are being addressed in a timely matter,” said Susan Voss, Chair of the Market Regulation & Consumer Affairs (D) Committee.
The new title standards proposed by state regulators include the analysis of marketing and sales practices by identifying affiliated business arrangements and reviewing the disbursement of transactional funds. The development of these standards was prompted by recent regulatory initiatives that examined potential kickbacks through affiliated business arrangements.
The revisions to the life insurance, annuity and indexed products standards address recent NAIC activities and updates to model regulations, specifically the changes to the NAIC Model Regulation (#275) regarding Senior Protection In Annuity Transactions. The amendments to this model relating to suitability of life insurance and annuity sales practices expand the target audience from senior citizens to include all citizens. In addition, two new examination standards have been created to address indexed annuity products.
“We are seeing an increase in the sale of annuity products in recent years. The variety of annuity products available to consumers in the market is continuing to evolve, but not all of these products are suitable for every consumer. Many consumers may not realize that some of these products are intended to be long-term investments or that they may have to pay income tax when the product has fully vested and the money is withdrawn from the account. With the addition of these proposed changes to the Market Regulation Handbook, market analysts and examiners will be able to better identify these issues,” said Jim Poolman, Chair of the Life Insurance and Annuities (A) Committee.
All proposed revisions to the Market Regulation Handbook are currently posted for comment until Friday, July 21, 2006 on the NAIC Web site at http://www.naic.org/committees_d_market_handbook.htm. The Market Regulation Handbook Working Group will meet again Saturday, Aug. 5, 2006 from 1:00 p.m. until 5:00 p.m. at the Hyatt Regency McCormick Place in Chicago, IL prior to the Insurance Regulatory Examiners Society (IRES) Career Development Seminar.