Idaho DOI Files Intent to Promulgate Rule on Suitability in Annuity Transactions

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On Thursday, July 19, 2010 NAFA participated in a public hearing (see p. 100) with the Idaho Department of Insurance, during which the Department discussed its intent to adopt Proposed IDAPA 18.01.09 (Rule 9), relating to Consumer Protection in Annuity Transactions.  The proposed rule mirrors the April 2010 NAIC Model Regulation for Annuity Transactions (#275) and would replace Idaho’s current ID Current Rule 9.

The discussion at the hearing centered on two issues, both relating to the proposed rule’s recordkeeping requirements.  In the first instance, Section 9 of the Model Regulation, which the NAIC deems as optional, would require insurers, agencies, and producers to maintain records and information used in making a annuity recommendation that were the basis for an annuity transaction for an unspecified number of years after the insurance action is completed by the insurer.  Idaho’s proposed rule includes this optional recordkeeping requirement (see subsection 021.01), and discussion centered on whether such records should be kept for any period of time after the contract is terminated or is no longer in force.  NAFA and the ACLI expressed the opinion that it was not necessary under the Suitability rules to require record retention for any period of years beyond the term of the contract.  The Department was receptive to this comment and may, instead, rely on the language in Section 021.01 of the current rule, requiring suitability-related record retention for “as long as the contract remains in force.”

In the second instance, the Department noted that its proposed rule kept the current rule’s requirement that producers who have terminated their appointment or whose license is suspended or revoked must remit records described in 021.01 to the insurer within 21 days of termination or change in license status.  (Note that this language is not included in the Model Regulation.)

The Department anticipates that it will publish its Notice of Proposed Rule no later than August 3, 2012.  At that time, the Department will take additional written comments.  In the early Fall it will issue a Notice of Pending Rule, and that pending rule will be considered by the 2013 Idaho legislature.  The approved rule will become effective on the date that the legislature adjourns–likely late March or early April 2013.

Insurance producers who are licensed in Idaho as of the effective date will have an additional six (6) months to complete the required one-time, four-credit annuity training course.  In addition, the rule recognizes reciprocity for producer who complete training requirements of another State that are “substantially similar” to Idaho’s requirements.

 


NAFA, the National Association for Fixed Annuities, is a national trade association exclusively dedicated to promoting the awareness and understanding of fixed annuities. NAFA is the only association whose sole purpose is advocating for the fixed annuity product.

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