Georgia Adopts NAIC Best Interest Rule




The National Association of Insurance Commissioners’ updated Suitability in Annuity Transactions Model Regulation, which adds a best interest standard of care for annuity sales, has been adopted by Georgia.
Training Requirements
New NAIC Training Requirement—A new state-approved training module (continuing education) must be taken through a state-approved vendor, such as Quest CE, RegEd, Success CE, or Kaplan. Access to approved vendors and information on training dates, times, and fees are available on the state insurance department websites. Producers must submit proof of their completed training to carriers prior to submission of business.

Additional General Annuity Training CE—As states adopt the revised regulation, Producers doing business in those states will be required to complete additional general annuity training CE. The length of the additional training varies, depending on whether a Producer has completed the previous four-hour training—those who have are required to complete a one-hour General Annuity Training CE, while those who haven’t must complete a four-hour General Annuity Training CE before selling or soliciting any annuities.
Producer Obligations
Producers must act with a heightened standard of care in the solicitation and sale of annuities, which is satisfied by meeting four obligations: care, disclosure, conflict of interest, and documentation. As part of this heightened standard of care, Producers must not place their financial interest ahead of the consumer’s interest.
Care—Producers must exercise reasonable diligence, care, and skill when making a recommendation by:
• Knowing the customer’s financial situation, insurance needs, and financial objectives.
• Understanding available recommendation options after making a reasonable inquiry.
• Having a reasonable basis to believe the recommended option effectively addresses the consumer’s financial situation, insurance needs, and financial objectives over the life of the product, as evaluated in light of the consumer profile information.
• Communicating the basis or bases of the recommendation.

Producers must have a reasonable basis to believe the consumer would benefit from certain features of the annuity and must be able to communicate the basis of the recommendation. The Producer is not required to choose the product that simply has the lowest compensation structure but must consider the contract as a whole, including product features, riders, and subaccounts at the time of purchase.
If the sale involves a replacement contract, the Producer must consider:

• If the replacing product would substantially benefit the customer.
• If the customer would incur surrender charges or lose benefits from their existing product.
• If the customer would be subject to a new surrender charge period or increased fees from the new product.
• Whether the customer has had another replacement in the last 60 months.