Regulators: Recommend only suitable annunities

The National Association of Securities Dealers and state regulators in North Dakota, Iowa and Minnesota signed a joint statement supporting a new rule to require that insurance companies and agencies recommend only suitable annuity products to their customers.
All four are members of the Annuity Working Group, which was established by the Minnesota Department of Commerce and Washington-based NASD last year to evaluate regulatory standards for annuities in a number of areas, including suitability.
Sales of fixed annuities, including equity index annuities, are regulated by state insurance commissioners whereas sales of variable annuities are regulated by the Securities and Exchange Commission, NASD, state insurance commissioners and state securities regulators.
As a result the obligations of the company or agent selling the annuities and the protections available to consumers differ according to which type of annuity they buy, and in which state they buy it, according to the Annuity Working Group..
The Annuity Working Group supports the Suitability in Annuity Transactions Model Regulation, recently approved by the National Association of Insurance Commissioners.
The model regulation — which, like other insurance regulations, would have to be adopted state-by-state basis — would impose a suitability requirement on the purchase or exchange of fixed annuities in those states that do not have such a requirement.