NAIC Ruling Increases Suitability Oversight on Fixed Annuity Sales

  • Originally published April 6, 2010 , last updated December 31, 2015
NAIC Ruling Increases Suitability Oversight on Fixed Annuity Sales

The National Association of Insurance Commissioners (NAIC) recently adopted a new amendment to its suitability regulations calling for carrier review of all fixed-annuity transactions.

Present in almost all 50 states, the new amendment will place greater supervisory responsibility on insurance companies, which will be expected to determine the suitability of agents' annuity recommendations and document non-recommended transactions, along with annuity training. To assess suitability, carriers are requesting more information on their applications and adding more screening.

Click here for more information about the new NAIC amendment.

The NAIC will allow broker-dealers to handle suitability supervision, while requiring insurers to provide broker-dealers with information and reports necessary to carry out that responsibility. Given their compliance burdens, some broker-dealers are relieved that the suitability responsibility for fixed annuities now clearly falls on the insurer.