Fiduciary/Best Interest Development
- Effective November 23, 2022, the Alaska Division of Insurance adopted rules establishing best interest standards on insurance producers and insurers for annuity recommendations to consumers based on the NAIC model (discussed below).
- These standards do not create a fiduciary obligation or relationship.
- When making a recommendation, the producer must act in the best interest of the consumer. To do that, the producer must know the consumer’s financial situation, insurance needs and financial objectives; understand the annuity options recommended; and have a reasonable basis to believe the recommended option effectively addresses the consumer’s financial situation, insurance needs and financial objectives based on the consumer profile information.
- Prior to or at the time of the recommendation, the producer must disclose important information to the consumer including the role of the producer in the transaction, the types of products the producer is authorized to sell, a description of the compensation to be received by the producer and notice of the consumer’s right to request additional information about the compensation. The regulation includes a form of disclosure that can be used for this purpose.
- The insurer must establish and maintain a system to supervise recommendations to ensure these requirements are satisfied and that consumer insurance needs and financial objectives are effectively addressed.
Source
Alaska Division of Insurance
