You must have reasonable grounds for believing that the recommendation to purchase or replace an annuity is suitable for the client based on the information provided by the client.
2020 NAIC SUITABILITY IN ANNUITY TRANSACTIONS MODEL REGULATION
In Spring of 2020, the NAIC approved revisions to the Suitability in Annuity Transactions Model Regulation #275 requiring producers to use "reasonable diligence, care and skill" in making recommendations and to act in the "best interest" of consumers. In states which have adopted the new NAIC model regulation or similar regulations, all recommendations or sales must be in the best interest of the client. Under this new model regulation, in addition to existing suitability requirements:
- The client's interest must be prioritized.
- Recommendations and sales must effectively address the client's unique financial situation, insurance needs and financial objectives.
- Producers must meet specific "best interest" obligations regarding care, disclosure, conflict of interest and documentation.
The following is a summary of new producer responsibilities under the 2020 NAIC Suitability in Annuity Transactions model regulation:*
- Complete new training credits prior to any state deadline.
- Obtain a signed "Insurance Agent (Producer) Disclosure for Annuities" form at the time of recommendation or sale.
- Obtain additional signed forms if a consumer refuses to provide certain information or is making a purchasing decision against a producer's recommendation.**
- Avoid and disclose any material conflict of interest
- If requested by the client, disclose any cash and non-cash compensation in the form of a range or percentage.
- Communicate the basis or bases of any recommendation to the client and make a written record of any recommendation, the basis for the recommendation and any disclosures provided (including oral disclosures).
*This is only a summary. You are required to comply with all the regulations that are applicable in the state in which you are selling or recommending the purchase of an annuity.
**Nassau will not issue a contract if the Annuity Suitability Questionnaire is not completed or if the sale was not recommended by the producer.