July 13, 2020

Volume X, Number 195

July 13, 2020

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Suitability Model Crosses the Finish Line

On February 13, 2020, the NAIC Executive Committee adopted revisions to the Suitability in Annuity Transactions Model Regulation (#275) (Revised Suitability Model), which incorporates a best interest standard of conduct for recommendations related to the sale of annuity products.

The Revised Suitability Model received almost unanimous support. New York, the only state to vote against, recognized that the Revised Suitability Model is better than the prior version of the Suitability Model, but chastised that the role of the NAIC should be to lift all states up, not accept a lesser standard that is merely the "common denominator."

California noted that, while it would vote in favor of adopting the Revised Suitability Model, it promotes the strongest standards possible to protect consumers and prefers a fiduciary standard. These comments beg the question whether California will adopt the Revised Suitability Model as is, or whether it will make additional revisions to include a fiduciary standard.

While the industry hopes for uniformity in the adoption and interpretation of the Revised Suitability Model, the next race is just beginning with Arizona leading the way. It remains to be seen if this will be a short sprint or a long, winding marathon.

©2011-2020 Carlton Fields, P.A. National Law Review, Volume X, Number 44


About this Author

Ann Young Black Carlton Fields Business Transactions Financial Services Regulatory Government Law & Consulting Life, Annuity, and Retirement Litigation Life, Annuity, and Retirement Solutions Securities and Derivative Litigation Securities Transactions and Compliance

Ann Young Black counsels financial services clients on a broad range of insurance, securities, and business issues. She regularly advises clients developing new and innovative life and annuity products and on the insurance and securities issues impacting those products. Ann also advises clients on the laws and regulations regarding the sale, distribution, issuance, administration and operation of, and benefit payment practices related to, these products. Clients also seek Ann's guidance on InsurTech initiatives, including the use of big data, artificial intelligence and machine learning,...

Jamie Bigayer Insurance lawyer Carlton FIelds

Jamie Bigayer counsels insurance and financial services companies on transactional, regulatory, and compliance matters arising under state insurance laws, federal and state securities laws, and related agency rules and regulations. Her practice focuses on the development and distribution of sophisticated financial products, including privately placed innovative fixed and variable life insurance and annuity products.

Jamie advises clients on a wide variety of issues including contractual issues, legal structure, disclosure requirements, sales and marketing practices, risk analysis, suitability, internal compliance policies and procedures, market conduct, licensing, and other compliance and regulatory issues affecting issuers and distributors of financial products.

Additionally, Jamie advises clients on the use of big data, artificial intelligence, and algorithmic models for accelerated underwriting, state data security and privacy laws, and the uniform electronic transactions act (UETA) and e-Signature requirements for implementing electronic transactions and document delivery.