The NAIC is a Kansas City, Missouri-based group for state insurance regulators. It can’t change states’ annuity sales standards directly, but it can develop “models,” or examples, of what the text of a law or regulation might look like. A state can then choose whether or not to use the model when developing its own laws or regulations.
The group began developing its annuity suitability model update in response to efforts by the U.S. Securities and Exchange Commission and some state insurance departments to create tougher rules on annuity seller conflicts of interest, to address concerns that some annuity producers might be selling customers bad annuities, or annuities that were a bad fit for their situations.
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