finra

FINRA

 

 

For Release:
NASD Contacts:

 

 

N. Dakota Contact:

 

Iowa Contact:

 

Minnesota Contact:

Tuesday, May 8, 2007
Nancy Condon (202) 728-8379
Herb Perone (202) 728-8464

 

Cecily Fong (701) 328-2484

 

Tom Alger (515) 242-5179

 

Bill Walsh (651) 296-7531

 

 

 

 

 

 

 

 



NASD, State Regulators Issue Joint Statement to Support Insurance Regulators' Model Annuity Suitability Regulation

Washington, DC — NASD and state regulators from North Dakota, Iowa and Minnesota announced today that they have signed a joint statement supporting a new rule to require that insurance companies and agencies recommend only suitable annuity products to their customers.

All four are members of the Annuity Working Group, which was established by the Minnesota Department of Commerce and NASD last year to evaluate regulatory standards for annuities in a number of areas, including suitability. Formation of the working group followed an Annuity Roundtable sponsored by the two regulatory bodies, to open a cross-jurisdictional dialogue on the regulatory framework under which annuities are marketed and sold.

Sales of fixed annuities are regulated by state insurance commissioners; sales of variable annuities are regulated by the Securities and Exchange Commission, NASD, state insurance commissioners and state securities regulators. As a result - although consumers rarely realize it - the obligations of the selling company or agent and the protections available to consumers differ according to which type of annuity they buy, and in which state they buy it.

The Annuity Working Group supports the Suitability in Annuity Transactions Model Regulation, recently approved by the National Association of Insurance Commissioners (NAIC). The model regulation - which, like other insurance regulations, would have to be adopted state-by-state - would impose a suitability requirement on the purchase or exchange of fixed annuities in those states that do not have such a requirement. Federal and certain state securities laws already impose suitability requirements on broker-dealer and investment adviser sales of variable annuities. The Suitability in Annuity Transactions Model Regulation would, for the first time, impose an express suitability obligation on insurance companies with respect to variable annuities.

It was the general consensus of the more than 20 securities and insurance regulators and industry executives who participated in last May's Annuity Roundtable that investors should have suitability protection, regardless of which regulatory regime covers the particular annuity product they buy. In its statement, the Annuity Working Group notes that the new model regulation represents an important step toward that goal, and it urges every state that does not currently have a suitability standard applicable to the sale of annuities to enact the NAIC's model rule.

Signing the joint statement were: Jim Poolman, Commissioner, North Dakota Insurance Department; Mary Schapiro, Chairman and CEO, NASD; Susan E. Voss, Commissioner, Iowa Insurance Division; and, Glenn Wilson, Commissioner, Minnesota Department of Commerce.

Details on the Annuity Roundtable co-sponsored by the Minnesota Department of Commerce and NASD are available on NASD's Web site at www.nasd.com/annuityroundtable.