Notice of Proposed Rule Making regarding Proposed 11 NYCRR 225 (Ins. Reg. 199) Suitability in Annuity Transactions

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The National Association for Fixed Annuities (“NAFA”)1 appreciates the opportunity to provide
comments on the use of senior-specific certifications and professional designations in the sale of
life insurance and annuities. NAFA’s sole mission is to promote the awareness and understanding
of fixed annuities and has partnered with a number of trade groups and industry members to
promote greater consumer financial literacy.

NAFA is also a strong proponent of efforts to eliminate inappropriate sales practices and identify
inappropriate sales persons. Putting measures in place to provide for an even more reliable sales
environment built on mutual trust and quality service is absolutely in the best interests of the
financial services marketplace and consumers looking for retirement solutions. Making this
temporary/emergency provision permanent would mark great progress in fostering this
ideal sales environment.

NAFA is pleased that consumer complaints related to annuities have declined significantly over
the past four years due in part to the enhanced suitability standards established by the NAIC
Suitability in Annuity Transactions Model Regulation (revised in 2010) and the more rigorous
oversight on the use of senior-specific designations established by the NAIC’s 2008 Model
Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale
of Life Insurance and Annuities . Consumer complaints have also declined due to NAFA
members who, even prior to state adoption, have committed attention and considerable resources
to establishing the standards and practices that each of these Models advocate.

NAIC Complaint Data through August 2012 shows that annuity complaints have hit an all-time
low. Total complaints lodged against indexed annuities dropped 81% between 2008 and 2011.2

Moreover, complaints of misrepresentation and unsuitable sales were down approximately 80%
over that same time period.3

This by no means suggests our work is done and we must continue to improve annuity education
and the annuity sales environment. NAFA’s Education Committee is currently finalizing its
Senior Designation Principles Paper, which instructs producers, brokers and advisors on the
appropriate use of designations and which includes a state-by-state guide to approved
designations. The publication also discusses best practices, provides ground rules for evaluating
designations, and examines existing case studies addressing issues associated with the use or
choice of a designation.

While the Paper is currently tailored as an educational piece for sellers of fixed annuities, the
Committee is working on a public version to help consumers understand the educational value of
qualified and approved designations. In addition, this piece will help consumers identify
unapproved designations as well as recognize and report misleading uses of approved
designations. This consumer publication will complement our existing Annuity Facts for
Consumers series.4

NAFA remains committed to protecting seniors from unfair, deceptive or abusive practices.
NAFA is further committed to supporting efforts which will enhance the understanding of these
products so that consumers, particularly those in or near retirement, will be better equipped to
make the right choices for their retirement plan. We also recognize that providing accurate and
easy-to-understand information about annuities and the role they play in providing for and
protecting retirement savings and retirement income is essential if we are to ensure that seniors
have true financial literacy. To this end, NAFA has created and where consumers can get reliable annuity information anonymously and

NAFA appreciates the opportunity to submit these comments and hopes you find them useful.
Please do not hesitate to contact us if you would like additional information or further

Respectfully submitted and signed,
Kim O’Brien
NAFA President & CEO

NAFA is a national trade association dedicated exclusively to promoting the awareness and understanding of fixed  annuities and educating regulators, legislators, consumers, members of the media, industry personnel, and distributors about fixed annuities and their benefits to retirees and those planning retirement. NAFA’s membership over 114,000 agents, advisors and registered representatives selling fixed annuities and approximately 84% of fixed annuities sold through independent distribution. NAFA was founded in 1998 and is headquartered in Milwaukee, Wisconsin. For more information regarding NAFA’s history and mission, please visit our website, at
Jack Marrion, Index Annuity Complaints Plummet, INDEX COMPENDIUM, Vol. 14, No. 4, April 2012, p. 2,
In 2011, there were 121 complaints related to misrepresentation and 64 complaints related to suitability. While both statistics were greatly improved over 2010 and down over 80% since 2008, because the data is not broken down by product type (only carrier) it is impossible to know how many complaints were related to indexed annuities. Id.
4 The Annuity Facts for Consumers series is offered free to the public at NAFA’s website for

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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