Louisiana Suitability Form and Regulations

September 3, 2019

Effective Immediately – Louisiana Regulation LAC 37: XIII Chapter 117, NAIC Suitability in Annuity Transactions

Purpose

To update Louisiana’s regulation on suitability and conform to the 2010 version of the NAIC Suitability in Annuity Transactions Model Regulation.

Summary

Louisiana has updated its suitability regulation to require the following:

Suitability Determination

Producer — The producer must have reasonable grounds for determining the suitability of the annuity sales recommendation to the prospective purchaser. The producer must collect, at a minimum, the following information regarding the potential purchaser in support of the producer’s determination of suitability:

  • Age
  • Annual income
  • Financial situation and needs (including financial resources used for funding the annuity)
  • Financial experience
  • Financial objectives
  • Intended use of the annuity
  • Financial time horizon
  • Existing assets (including investment and life insurance holdings)
  • Liquidity needs
  • Liquid net worth
  • Risk tolerance
  • Tax status

Beginning with sales recommendations made on or after June 20, 2019, the producer must collect information on The Standard’s Suitability Profile form. The form must be completed, signed by both the producer and the prospective purchaser, and submitted to The Standard together with the application. The producer must keep a copy as well as provide a copy to the client. The Suitability Profile form may be found on our website. Select your distributor in the drop-down menu, then go to Find Forms and Materials and proceed through the new business forms search under the appropriate state.

Standard Insurance Company — The Standard’s individual annuity intake personnel must enter the suitability information included on the Suitability Profile form into the suitability database. Any “flags” raised as a result of such information entered into the database must either be:

  1. Resolved to show a company determination that the recommendation is suitable, and such resolution must be clearly documented; or
  2. Communicated to the producer as part of our decision not to proceed with the application due to failure to meet applicable suitability requirements.

Producer Training

Because Louisiana had previously adopted Section 7, “Insurance Producer Training,” of the NAIC’s Suitability in Annuity Transactions Model Regulation and is now only adopting the remaining Sections of the Model, there will not be any special consideration regarding state CE or producer training requirements for producers in the state. All producers who recommend the purchase of an annuity by The Standard in Louisiana must be properly appointed with us and have taken the product-specific producer training.

Questions and Additional Information

Our goal in Compliance is to support and enable Departmental sales goals in such a manner as to mitigate and eliminate any risk of compliance exposure. We appreciate the efforts of our producers to support and maintain our compliance position. Please feel free to contact us at 800.247.6888 if you have any questions or need additional information regarding this Compliance Alert.