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07/23/2024 11:02 AM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20170&cosponId=25841
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted: May 14, 2018 09:42 AM
From: Representative Anthony M. DeLuca
To: All House members
Subject: Annuity Suitibilty
 
In the near future, I intend to introduce legislation that would update Article IV-B (Suitability of Annuity Transactions) of the Insurance Company Law. As the Commonwealth’s population ages, it is imperative to have strong standards in place to ensure our citizens receive clear and appropriate sales, marketing, and financial advice relating to the purchase and management of annuity contracts from insurers and insurance producers.

Pennsylvania’s Suitability of Annuity Transactions law was originally passed in 2010 to protect consumers from being placed into an annuity contract that was not suitable for the consumer. That legislation was inspired from the NAIC Model Regulation of that same year. While the 2010 law was a great step forward in consumer protection, the NAIC and other states have moved ahead to provide more safeguards for consumers in the ensuing years.

My legislation will follow the evolution of the Annuity Suitability protections seen in other jurisdictions and provide the Pennsylvania Insurance Department with increased authority by ensuring that a consumer has been reasonably informed about various policy features of the annuity, such as surrender fees, investment advisory fees, tax penalties, etc. A determination of suitability shall be based on the consumer’s suitability information, which includes the consumer’s age, income, financial experience, financial objectives, liquidity needs, risk tolerance, tax status, and other factors. My bill would expressly prohibit an insurer from issuing an annuity recommendation to a consumer unless there is a reasonable basis to believe that the annuity is suitable for the consumer.

Lastly, my bill institutes a continuing education requirement for insurers and their producers who sell annuities. The education requirement consists of a four-hour course that will cover the types of annuities and their various classifications, the application of income taxation of qualified and nonqualified annuities, and the primary uses of annuities among other topics.

Please join me by co-sponsoring this vital consumer protection. Pennsylvania is fortunate to have a large number of highly-skilled, knowledgeable, and well-intentioned insurance professionals. It is my hope that this legislation will ensure that only those professionals will be offering these complex insurance products that provide retirement security to so many elderly Pennsylvanians.



Introduced as HB2434