• 2017 0731 - Letter - CFA to NAIC (Annuity Suitability Working Group) - re: Regarding “Best Interest” Amendments to the NAIC Suitability in Annuity Transactions Model Regulation - 5p
    • 1. The standard of care for consumers should be a fiduciary standard that obliges the insurer or producer to act in the best interest of the consumer.
    • 2. The best interest standard provisions must be stronger than the current suitability standard. Relabeling “suitability” as “best interest” would be a sham.
    • 5. The application of the enhanced model should be broadened to investment-type life insurance products. The same standard of care – best interest of the consumer – is clearly as appropriate for investment-type life insurance – for example, indexed universal life – as it is for annuity products. A uniform standard of care across all types of investment products means both consistent consumer protection and a level regulatory framework preventing one type of investment product from regulatory arbitrage.
  • 2018 0122 - Letter - CFA to NAIC - re: “Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation.” - 11p
    • The scope of the proposal is too narrow.
      • Another flaw of the NAIC proposal is its too narrow scope. NAIC’s proposed “best interest”
        standard applies only to annuities and applies only at the point of sale.
    • As you know, life insurance companies routinely sell certain types of insurance products, such as variable and indexed universal life insurance, based at least in part on their value as investment and savings vehicles. The following are just a few examples we found through a quick Google search:
    • We are not suggesting that these descriptions are misleading or deceptive. On the contrary, our point here is that these life insurance policies are marketed based on features that are virtually indistinguishable from the features of annuities.
    • Given these similarities, it makes no sense to adopt a best interest standard for one type of insurance investment, annuities, and exempt other types of insurance investments, variable and indexed universal life insurance, from that standard.
    • That is why, when we and others wrote to the NAIC last July, we urged the NAIC to include all insurance products sold as investments in any standard it adopts. As we wrote at the time, “The same standard of care – best interest of the consumer – is clearly as appropriate for investment-type life insurance – for example, indexed universal life – as it is for annuity products.”
      • 2017 0808 - ThinkAdvisor.com - Annuity Rules Should Apply to Investment-Type Life Products: Consumer Reps, By Allison Bell - [link]