|Posted:||June 7, 2021 12:03 PM|
|From:||Senator John DiSanto and Sen. Sharif Street|
|To:||All Senate members|
|Subject:||Updating Pennsylvania's Annuity Laws|
|We will soon introduce legislation to improve the marketing and financial stability of annuities. Our proposal incorporates two changes the National Association of Insurance Commissioners (NAIC) made to its model laws on which Pennsylvania’s annuity law is based.
First, it updates the standard for sales of annuities from “suitability” to “best interest”—meaning a producer and insurer have to make sure a sale of an annuity is not just suitable for the consumer, but in the consumer’s best interest. This higher standard will match the SEC’s “best interest” standard for federally regulated securities transactions. In addition, this establishes robust disclosure duties as well as heightened prohibitions on possible conflicts of interests.
Second, it updates the minimum nonforfeiture rate for individual deferred annuities, lowering that rate from 1.0% to .15%, again matching the change the NAIC made to its model. The minimum nonforfeiture rate is the lowest interest rate guarantee an insurer can use to determine the cash value of an individual deferred annuity. The change reflects today’s sustained low-interest rate environment and seeks to maintain insurer solvency and availability of annuity options for consumers.
This is a national initiative and comes with the support of the NAIC, the Insurance Department, insurers, and producers. Please join us in co-sponsoring this important piece of legislation.
Introduced as SB772