Nearly every state requires producers who work with annuity products to complete state-specified levels of product suitability training, based on regulation recommendations included in the NAIC's Suitability in Annuity Transactions Model. This model reg was updated early in 2020 to a "Best Interest" standard of producer and insurer conduct, and requires that both resident and non-resident producers licensed to sell annuity products, complete additional training.
For those who already completed the previously prescribed 4-hour Annuity Suitability course, completion of a 1-hour CE-approved training course is now required, covering added consumer disclosures and explaining the best interest standards of conduct.
Is there a new annuity producer training requirement for best interest?
Producers who completed a state-approved 4-hour annuity suitability course to satisfy previous suitability training requirements have a 6-month window to complete an additional 1-hour of training, beginning with the effective date of the rule. An approved 4-hour annuity best interest course will also satisfy the update requirement.
Producers licensed on or after a state's annuity Best Interest regulation's effective date, are required to complete a 4-hour annuity Best Interest certification course covering:
Annuity types, classifications, and primary uses
The parties to the contract
How fixed, variable, indexed contract provisions affect consumers
How qualified and nonqualified annuities are taxed
Appropriate standard of conduct sales practices, and
Replacement and disclosure requirements
A.D. Banker offers 4-hour Annuity Best Interest courses online and via live webinar in all approved states. In states that have not yet updated producer annuity training from Suitability to Best Interest, the 4-hour Annuity Suitability courses will still be available for new producers.
Which states have adopted Best Interest requirements so far?
Can producers complete Best Interest training prior to the effective date?
This question came to the surface in mid-October, when Iowa's Insurance Commissioner, Doug Ommen issued an official bulletin allowing resident and non-resident producers licensed in his state to complete the state's annuity 1 and 4-hour best interest training courses in advance of the actual effective date of their statute. Arizona followed suit, but only allowed early completions for the 1-hour update course. As more states amend existing Suitability standards to the new Best Interest model, we recommend verifying the answer to this question on a state-by-state basis. As we determine whether a state will allow early completion, we will update our map downloads and will also post updates on each state's Continuing Education Licensing Requirements page on our website.
How will producer training reciprocity be interpreted between Suitability and Best Interest states?
This remains to be determined. In 2021, as more states move to a Best Interest standard, carriers and insurance departments will be asked to interpret producer training reciprocity for those who complete Best Interest training in one state and seek non-resident certification approval in a "Suitability" state.
For now, most industry compliance experts agree that completion of 1-hour update course in a non-resident state that has adopted the best interest standard will satisfy that producer's non-resident best interest requirement, and will also serve to satisfy the resident state requirement when it is updated at some point in the future. The NAIC Annuity Suitability Working Group is working to finalize an FAQ Implementation Document to provide uniform guidance for state regulators and legislators. Ultimately, the way the Model Law is written, the responsibility for vetting and interpreting producer training reciprocity falls to the carrier.
Additional states that have expressed interest in updating existing annuity Suitability statutes or regulations include: Idaho, Tennessee, Texas, West Virginia, and Wisconsin.