The initiative to create a model regulation governing the sale of fixed and variable annuities to seniors will come to life after the fall meeting in Chicago of the National Association of Insurance Commissioners.
The Life and Annuities Committee plans on conducting a final conference call in two weeks to shore up language in the model regulation and give the committee time to vote to accept it before the September meeting, said Merwin Stewart, committee chair and commission of the Utah Insurance Department.
"For the most part, we are in agreement with proposed changes," Stewart said. "We are very close to getting this thing wrapped up."
Stewart stressed that the commissioners "dont want to over-regulate" the sale of annuities and have been trying to work efficiently with the industry to produce "effective regulation."
Progress on the draft stalled after two rocky conference calls prior to the New York meeting, but negotiation and compromise appear to have reached a final stage. Representatives from the Wisconsin Department of Insurance presented language that comes from a regulation they plan on implementing in their own state. Linda Lanam, vice president of annuities at the American Council of Life Insurers, presented alterations and otherwise said the ACLI is "not prepared to give support at this time."
"The ACLI membership continues to believe that Wisconsin moves from [creating an incentive for] good behavior to sales supervision," Lanam said.
Ron Panneton of the National Association of Insurance and Financial Advisors challenged Lanams proposal, expressing concern that the model regulation does not adequately assure that corrective action will be taken on behalf of the customer. Since the NAICs earlier attempt to create a suitability regulation, NAIFA has taken the position that the NAIC is catering more to the interests of the carrier than it is protecting consumers.
"I dont get it. You dont think this [protects the consumer]?" said Jim Poolman, committee member and commissioner of North Dakota. Poolman has vocally demanded that the various participants work hard to come to a consensus so this issue does not drag on as it has in the past. "The state has the hammer. The company then has a program in place to also take corrective action," Poolman said.
When Panneton continued to argue his case, Poolman said, "I think were there. This discussion could be futile when I think what could happen here is there is a potential conflict in the works."