Sections 1 and 2 are conforming changes related to the adoption of an NAIC model regulation relating to suitability standards for sale of annuities.
Section 3 provides exemptions from application of the bill.
Section 4 establishes definitions for purposes of annuity regulation.
Section 5, subdivision 1, establishes suitability standards when an insurance producer recommends to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions.
Subdivision 2 requires that an insurance producer must make reasonable efforts to obtain consumer suitability information before the execution of a purchase, exchange, or replacement of an annuity resulting from a recommendation.
Subdivision 3 prohibits an insurer from issuing an annuity recommended to a consumer unless there is reasonable basis to believe the annuity is suitable.
Subdivision 4 provides exceptions to the suitability standards.
Subdivision 5 requires an insurance producer or, where no insurance producer is involved, the responsible insurer representative, to make a record of any recommendation and to obtain documentation in specified circumstances.
Subdivision 6 requires an insurer to establish a supervision system reasonably designed to achieve the insurer's and its producer's compliance with the suitability standards.
Subdivision 7 prohibits an insurance producer from dissuading a consumer from truthfully responding to an insurer's request for confirmation of suitability information, filing a complaint, or cooperating with the investigation of a complaint.
Subdivision 8 establishes a safe harbor under the regulation for sales made in compliance with FINRA (Financial Industry Regulatory Authority) requirements pertaining to suitability.
Section 6, subdivision 1, prohibits an insurance producer from soliciting the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with insurer standards for product training.
Subdivision 2 requires an insurance producer to complete a onetime four-credit training course approved by the Commissioner to engage in the sale of annuity products. Requirements for the course are specified.
Section 7 specifies enforcement powers of the Commissioner of Commerce under the bill.
Section 8 requires insurers and producers to maintain and be able to make available to the Commissioner records of information collected from the consumer and other information used in making recommendations. Records may be maintained in a variety of mediums and must be kept for 10 years.
Section 9 specifies the relationship of this act to other insurance laws.
Section 10 provides for an January 1, 2013, effective date.