Regulators Promise Suitability Solution

Long term care products suitability is currently addressed in a NAIC long-term care model, Covington added.

The broader charge would allow systems solutions such as software programs to be considered as viable options, Stewart said.

Indeed, a revised schedule for the commissioners round table session, dated Sept. 10, lists a suitability presentation by LIMRA International Hartford, Conn., on the agenda.

Interviews suggest that the LIMRA program displays a green signal if a clients data indicates the product is suitable, a red signal if it is unsuitable, and a yellow signal if it is unclear whether a sale is suitable.

However, Covington said that if a systems solutions was sought, software to be considered would not be limited to the LIMRA offering.

Other systems would also be looked at before a vendor was selected, Stewart said. A systems solution would move from the point of a producer relying totally on training and memory and allow for more consistency, Stewart said. Ultimately, it could help protect a producer as well as a company from an unsuitable sale. Regulators could be assured that real value was being offered when a sale was made, he added.

In addition, other options such as an Iowa suitability model regulation could also receive consideration, regulators confirmed. Also, needs-based selling standards detailed by the Insurance Marketplace Standards Association, Washington, could be a piece of the solution, they added.

During the "A" session, Stewart said it was also possible changes could be made to the existing life insurance and annuities suitability model act and model regulation.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.