DeLuca bill would update annuity transaction law
Legislation would make sure annuity products best suit buyers’ needs
HARRISBURG, June 4 – State Rep. Tony DeLuca, D-Allegheny, is pleased that his legislation – which would ensure that annuity purchasers in the commonwealth are suited with the correct annuity products that best serve their needs – was approved today by the House Insurance Committee.
House Bill 2434 would establish criteria to ensure consumers have been reasonably informed about various policy features of an annuity; including surrender fees, investment advisory fees and tax penalties, among other consumer protections before the annuity is purchased.
“It is imperative to have strong standards in place to provide our residents with clear and appropriate sales, marketing and financial advice relating to the purchase and management of annuity contracts from insurers and insurance producers,” DeLuca said. “My bill would also institute training requirements for insurers and their producers who sell annuities.”
DeLuca’s proposal would update the suitability of annuity transactions of the Insurance Company Law and would prohibit an insurer from issuing an annuity recommendation to a consumer, unless there is a reasonable basis to believe that the annuity is in the best interest of the consumer.
“A determination of suitability would be based on the consumer’s information, which includes the age, income, financial experience and objectives, liquidity needs, risk tolerance, tax status and other factors,” DeLuca said. “This protection is needed for all Pennsylvanians, and especially for our seniors.”
The state’s Suitability of Annuity Transactions Law was passed in 2010 to protect consumers placed in an annuity contract that was not suitable for the consumer. However, the National Association of Insurance Commissioners passed an updated model bill to strengthen suitability requirements.
“My legislation will bring the commonwealth into alignment with the 37 other states and the District of Columbia that have passed the updated NAIC model bill, and provide commonwealth residents with added consumer protections when purchasing annuities.”
DeLuca is the Democratic chairman of the House Insurance Committee.