Jim Poolman on North Dakota's newly enacted statute related to suitability in annuity transactions with all consumers
Annuities are becoming more and more popular as financial planning tools for consumers of all ages. With the products becoming more complex, regulators across the country are giving these products increased scrutiny.
Consumer complaints are also on the rise because of allegations that some sales of were not “suitable” for their personal situation. More responsibility will be placed on both the insurer and the insurance producer to gather the necessary information to determine whether the product is suitable for the purchasers’ personal circumstances.
Former North Dakota Insurance Commissioner Jim Poolman, who helped author the National Association of Insurance Commissioner’s model act relating to suitability in annuity transactions, discusses the responsibility of all parties in the newly enacted statutes in North Dakota.
After discussing the statute and its provisions in detail, Poolman writes: “The North Dakota suitability statutes will resemble what many other states will be doing. In an era when annuity products that are becoming more popular yet more complex, companies will want to err on the side of caution when complying with the new laws. Compliance programs with more thorough “testing” of transactions for suitability will prove more reliable and friendlier to regulators as they examine companies. Those companies and producers without clear written guidelines on how to test for suitability, that have poor recordkeeping and documentation and poor or undocumented procedures on how to handle grievances with their customers, will certainly be subject to the regulators’ scrutiny.”