On Feb. 23, CAL LEG issued bill regarding annuity sales supervision.
CAL LEG passed, enrolled Bill SB 263 re insurance; annuities, life insurance policies.
Revised suitability requirements for annuity transactions to adopt, with modifications, changes based on NAIC Suitability in annuity transactions model, NAIC Model 275.
Added training requirements for licensed or prospective life insurance, annuity sellers.
Requires an agent who sells life insurance policies to complete 4 hours of training.
Before soliciting individual consumers to sell life insurance policies; additional 2 hours of training before each license renewal; in addition to annuity training requirements.
Trainings must be approved by CAL INS commissioner; consist of topics, requirements related to life insurance policies, California law, regulations, prohibited sales practices.
Topics also include fraudulent/unfair trade practices, recognition of indicators that prospective insured may lack short-term memory/judgement to purchase product.
Training requirements do not apply to direct response provider nonresident agents.
Suitability Requirements
Recast provisions related to best interest standard of conduct for producers when making recommendation to purchase, exchange, convert, replace, or modify annuity.
Specified that purpose of suitability requirements for annuity transactions is to require producers to act in the best interest of the consumer when making a recommendation.
Required insurers to establish, maintain, utilize system to supervise recommendations.
Set forth standards, procedures for recommendations that result in transactions involving annuities, to effectively address insurance needs, financial objectives.
Provided that producer acted in best interest of consumer if they satisfy obligations.
Of care, disclosure, conflict of interest, documentation, best interest obligation, transactions not based on recommendation, supervision system, safe harbor.
Required life insurer to provide buyer’s guide to all consumers who purchase annuity.
Guide must be delivered as standalone document with or before delivery of annuity.
Established new, revised existing definitions for purposes of suitability requirements.
Legislative History
On Jan. 30, 2023, bill was introduced in Senate; on May 30, 2023, bill passed Senate.
On May 31, 2023, was introduced in Assembly; on Feb. 12, 2024, passed Assembly.
On Feb. 23, 2024, bill was enrolled and presented to the governor.
Effectiveness
This article applies only to annuity sales/recommendations made after Jan. 1, 2025.
Feb. 29, 2024 CAL LEG Governor Approval
On Feb. 29, 2024, CAL LEG reported the California governor signed bill SB 263, Ch. 2.
In Jun. 2024, CAL INS reported on new 2025 life policy 4-hour course, see #218687.
Regulators
CAL INS; CAL LEG
Entity Types
IB; Ins
Reference
PR, Ch. 2, 2/29/2024; Bill SB263, 2/23/2024; Citation: *CAL INS* 1-2-5-13.5-1749.81, 2-2-5-9-10509.914, 2-2-5-9-10509.915, 2-2-5-9-10509.919, 2-2-5-9-10509.9200; NAIC Model 275;
Functions
Compliance; Financial; Legal; Operations; Registration/Licensing; Sales Practices; Suitability; Training
