State Roundup

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The great majority of states have adjourned or are in recess for the 2011-2012 regular legislative session: as of today’s date, only South Carolina (11/12/2012), Pennsylvania (11/30/2013), the District of Columbia (12/12/2012), Michigan (12/12/2012), Ohio (12/31/2012), and New Jersey (01/13/2013) have projected adjournment dates beyond July; New York has an official adjournment date of January 4, 2013, but has been in recess since June 21, 2012.  Accordingly, all legislative activity, including legislation affecting the annuity industry, is significantly reduced, although state regulatory agencies remain active throughout the calendar year.  The following highlights several bills or proposed rules of particular interest to our industry:

ALABAMA: Producer Continuing Education and Licensing Renewal

The Alabama Commissioner of Insurance is proposing to revise existing rules related to continuing education and license-renewal requirements for resident insurance producers and service representatives. The proposed revisions would continue to exempt from the CE requirements those producers who are exempt from the CE requirements as of December 31, 2012 (because they have reached the age of 60 and have held an Alabama license for 15 or more years), but this exemption will not exist going forward (See 482-1-110-.03(3)). In addition, resident producers who renew their licenses in 2013 and 2014 will be able to carry forward excess CE hours acquired prior to January 1, 2013, and had been carried into their renewal in 2011 and 2012, but, after their 2013 and 2014 renewal, they will no longer be able to carry over excess CE hours. (See 482-1-100.05. (3)). Comments may be submitted on or before 10/18/2012 to Alabama Department of Insurance, Attn: Legal Division, P.O. Box 303351, Montgomery, Alabama 36130-3351, or orally by appearing at the public, which may be found at

CALIFORNIA: California Enrolls Bill Relating to Insurance Selling Practices Targeted Towards hearing on that date at Suite 502, RSA Tower, 201 Monroe St., Montgomery, Alabama, 10:00 a.m.  NAFA intends to submit a Comment Seniors

California Senate Bill 1770 proposes various changes to the California Insurance Code related to insurance transactions involving persons aged 65 or older (a “senior”).  The bill would make it illegal for insurance agents, who aren’t also California-licensed attorneys, to deliver legal documents (such as trust documents) to a senior other than an annuity contract, if the purpose of the delivery is to sell an insurance product. For insurance agents who are also attorneys, the bill would allow such delivery, but it would require the agent-attorney to comply with the disclosure requirements of the attorney professional code of ethics as a fiduciary.  The bill would also require certain disclosures on worksheets and questionnaires that are designed to collect personal or financial information about a prospective senior who is considering the purchase of an annuity. In addition, it would add compliance requirements related to prior notification of any insurance-annuity sales meeting if the prospective client is a senior.   Enrolled CA SB 1170 was presented to the Governor for his consideration on August 28, 2012, and he signed the bill into law on September 27, 2012:  CA SB 1170, Chapter 653, Statutes of 2012.

COLORADO: DORA Adopts Changes to CO Producer Licensing Model Act

On July 20, 2012, the CO Department of Regulatory Agencies – Insurance Division submitted a draft proposed amendment to the Colorado Producer Licensing Model Act, 3 CCR 702-1, relating to the regulation of insurance producers by the Division.  Amended Rule 3 CCR 702-1 expands the Rule’s definition of continuing education classes to include certain live video conference or webcast courses, would provide certain self-study courses to be eligible for CE approval, would require that CE attendance and completion records would be filed electronically, and reduces, from 15 to 7, the number of days required to file the record of completion.  A hearing was held on Thursday, August 16, 2012, and the Division adopted the Rule, effective October 15, 2012.

IDAHO: Idaho DOI Proposes Rule on Suitability in Annuity Transactions

The Idaho Department of Insurance has proposed revisions to its current Rule 9 to reflect and adopt the (2010-revised) NAIC Model Regulation on Suitability in the Sale of Annuities, Proposed IDAPA 18.01.09.  The proposed new rule was published in the Idaho Administrative Rules Bulletin on September 6, 2012.  NAFA participated in a telephonic public hearing with the ID DOI on July 19, 2012, providing testimony related to the proposed rule’s recordkeeping requirements.

The proposed rule will next be considered by the 2013 Idaho legislature.  If approved, the 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 producers who complete training requirements of another State, one that would be “substantially similar” to Idaho’s requirements.

INDIANA: NAIC Model Regulation on Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities is Now in Effect

The Indiana Department of Insurance has adopted the 2008 NAIC Model Regulation on the Use of Senior-Specific Certifications and Professional Designations, 760 IAC 1-79.  The final rule was filed with the State Publisher on July 19, 2012, and became effective as of August 20, 2012.

KANSAS: Suitability Standards in Annuity Transactions

The Kansas Insurance Department (KID) has adopted a policy that would amend Kansas Administrative Rule 40-2-14a to adopt, by reference, the 2010 NAIC Suitability in Annuity Transactions Model Regulation.  The proposed rule, K.A.R. 40-2-14a (proposed), generally follows the model regulation, but, in addition to one-time 4-hour CE training and PST, would require that, after completing the one-time training, insurance producers must take one hour of annuity suitability training per 2-year licensing period as part of their required biennium CE credits.  Reciprocity is recognized.  A public hearing will be conducted at 1:30 p.m., November 28, 2012, in the third floor conference room, Kansas Insurance Department, 420 S.W. 9th, Topeka, Kansas, to consider the adoption of the proposed rules and regulations.  NAFA will be submitting a comment, which can be found at

NEW JERSEY: Suitability Standards in Annuity Transactions

The New Jersey Department of Banking and Insurance – Office of Life and Health provided notice on June 4, 2012, that it proposes to repeal its current suitability rule, which was adopted in June 2011, and didn’t include insurance producer training requirements, and replace it with N.J.A.C. 11:4-59A. The proposed new rule would bring New Jersey in line with the NAIC Suitability in Annuity Transactions Model Regulation. Status: No change has occurred since written comments were received August 3, 2012.

NEW YORK: Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities

On August 22, 2012, the New York Department of Financial Services issued a Notice of Proposed Rule Making regarding Proposed 11 NYCRR 225 (Ins. Reg. 199).  The proposed permanent rule is identical to the temporary Emergency Rule, NY Emergency Rule 199, which has been in place since December 2011, and is substantively identical to the NAIC model regulation. Although, there has been a violations section included in the New York regulation, classifying an infraction of the rule as a prohibited trade practice subject to investigation by the Superintendant. There could also be possible civil penalties. NAFA has submittted a comment, which may be found at

OREGON:  Temporary Reporting Rule for Producer Licensing and Continuing Education

On June 19, 2012, the Oregon Department of Consumer and Business Services adopted temporary rule 836-071-0110, requiring Oregon-licensed insurance producers to submit electronically–to the extent possible–their license applications (and renewals) and continuing education records. Additionally, non-Oregon-resident producers will have to provide background information electronically.  There are electronic-filing requirements for CE vendors and fingerprint examination vendors as well.  The temporary rule went into effect August 1, 2012, and goes through January 25, 2013.

OHIO: Producer Continuing Education and Licensing Renewal

The Ohio Department of Insurance is considering amending two Ohio administrative rules relating to (1) Insurance Producer Continuing Education (Ohio Rev. Code Ann. § 3901-5-01) and (2) Insurance Producer License Renewal Fees (§ 3901-5-09). The purpose for amending rule 3901-5-01 is to clarify that Ohio resident agents must successfully complete their required number of CE hours before requesting their license renewal and to require the CE provider or Superintendent to post the CE credits. The purpose for amending 3901-5-09 is to reduce the fees for late filing of a renewal application during the renewal period (from $100 to $50) and during the reinstatement period (from $300 to $100) and to give the Superintendent authority to waive such fees due to extenuating circumstances. The Ohio DOI held a public hearing at 11:00 am on Tuesday, October 9, 2012, at the Department offices, 50 W. Town Street, 3rd Floor, Suite 300, Columbus, OH 43215. Submitted comments may be found at

OHIO: 70/10 Rule’s Implementation Took Place October 9, 2012

As a reminder, revisions to Rule 3901-6-16, related to annuity nonforfeiture product standards and adopted on June 11, 2012, by the Ohio Department of Insurance was implemented on Tuesday, October 9, 2012.  As such, the new rule will apply to contracts issued on or after that date.  The new rule defines, for the purpose of the prospective test, the “maturity date” used in calculating nonforfeiture values for annuity contracts to be either the tenth anniversary of the contract or the contract anniversary following the annuitant’s 70th birthday.  The contract anniversary, used as the maturity date, should be considered as the first day of the year following the contract anniversary, not including any premium payments for that year.

You may recall that NAFA was engaged with legislators and OH DOI regulators and staff to draft the revised regulation in a manner more favorable to the fixed annuity industry. While we were successful in delaying the rule’s implementation, the work to address the affects of the 70/10 revisions must continue with the Ohio legislature.

If you have questions or comments, please contact Pam Heinrich at or, or call


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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