An annuity sales bill updating California’s suitability standard is expected to be presented Wednesday to the state Assembly Committee on Insurance.
After a brief delay, the bill is back on track after a pair of industry trade associations withdrew their objections late last week.
The California annuity sales bill is based on the best-interest model law put forth by the National Association of Insurance Commissioners. Industry lobbyists support the best-interest standard as a preferable option to a fiduciary law.
After months of discussion with the office state Sen. Bill Dodd, D, who sponsored the annuity sales bill, the Independent Insurance Agents and Brokers of California and the National Association of Insurance and Financial Advisors agreed on language that will “enhance and update the existing Annuity Suitability law and make it the strongest suitability law in the country,” according to a June 22 letter from the trade groups.
The industry lobbyists conceded on some issues as well, the letter adds.
“We agreed to enhanced training requirements for life agents who sell life insurance products that tend to be more complex than the traditional term life products,” the letter states. “This consumer protection will help to ensure that agents have the proper training to help consumers make educated decisions about their life insurance needs.”
California the 40th
The bill will head to the Assembly Appropriations Committee next, a NAIFA spokesperson said, and to the floor after that. A full vote could come as soon as August. California would be the 40th state to adopt the best-interest standard based on the NAIC model law.
The annuity sales bill passed the California Senate in May with no opposing votes at the committee level or from the floor. In the weeks that followed, the bill attracted plenty of attention from industry lobbyists.
During a Washington. D.C. meeting last week hosted by the National Association for Fixed Annuities, analysts said the California bill would have ended up far worse without trade groups stepping in to offer input.
As an example, the initial version of the California rule would have required a producer to obtain specific personal information from a client before making a life insurance recommendation, explained Brad Campbell, partner at Faegre Drinker Biddle & Reath.
“If the client refused to tell you one of those items you would not be allowed to, which is a weird burden to put on the producer and a weird way to prevent the client from having any autonomy in what they choose to share with you,” he added.
InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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