Meeting the new Annuity Suitability training requirement

Background

In March of 2010, the National Association of Insurance Commissioners (NAIC) finalized its Suitability in Annuities Regulation, which requires anyone selling annuity products receive mandatory suitability and product training.

This action was taken to protect consumers. The intention of the regulation is this: by establishing standards to ensure all annuity producers are trained in the new suitability requirements, annuity products will be represented accurately.

Not a New Continuing Education Requirement 

Annuity suitability training is not a new continuing education requirement and – this is important – it is the insurance carriers, not the state insurance departments, who must validate the compliance of their producers.

But the Individual States are Still Involved

Although the regulation puts the burden of compliance on the carriers and producers, states retain the right to decide the specific details of the training requirement upon implementation. This means that, while all training courses will follow the NAIC’s template (e.g. courses must be 4 hours in length), each state will address specific aspects within the broader context of the regulation, and one can expect some variation in content from state-to-state.

And the Education Providers Still Play a Role

In addition, even though the regulation requires carriers to develop standards for product training and must validate that its brokers and producers are in compliance, the suitability training must be taken through a state-authorized continuing education (CE) provider. With CE providers offering the training, it is expected that the courses will be approved for CE credit, and can be applied to the producer’s record in order to meet the resident state’s mandatory requirement.

Because CE credit is optional, however, there are some things producers should watch for. First, they should make sure the training course has been submitted and approved for CE. In addition, producers need to keep in mind that while they typically receive reciprocal credit from non-resident states for meeting license requirements in their resident states, reciprocal credit is granted for meeting another state's similar training requirement. It is impossible to meet a requirement that has not yet been implemented in one’s resident state, so completing a course prior to the effective date is not valid for reciprocal credit from another state in which the requirement is already effective.

Completing a course should result in the issuance of a Certificate of Completion that indicates the following: date of course completion, state for which the training was approved, course name and course number. A certificate that does not include this information is not proof of compliance! A certificate with this information needs to be issued regardless of whether CE credits were earned.