Alabama, Arizona,
Connecticut, DC, Florida, 
Illinois, New Jersey, 
New Mexico, New York, 
South Carolina, 
Tennessee, Wisconsin

Legislation and regulation in 2007 brought some interesting changes for the annuity industry. Most notably are the attempts and lack of successes at passing the Interstate Insurance Product Regulation Compact. In 2007, a single state, Tennessee, passed legislation joining the Compact, bringing the total to 30 states now participating in the Compact.  Seven additional states (Alabama, Arizona, Connecticut, Florida, Missouri, New Mexico, South Carolina) let proposed legislation die in session. Some states appear reluctant to join the Compact and fearful that their ability to have local oversight of insurance issues will be compromised. Four states (Illinois, New Jersey, New York, Wisconsin) and the District of Columbia, still have proposed legislation pending. 

The Interstate Insurance Product Regulation Commission intends to streamline and speed up the process of product approval and speed to market. The Commission has made significant advances toward this goal and approved its first insurance product in July 2007.

California, Illinois, 
Indiana, Iowa,
Maryland, Montana,
South Carolina, Texas

Suitability and unfair trade practice issues were also significant topics of discussion during the 2007 legislative session. The states of California, Hawaii, Illinois, Indiana, Iowa, Maryland, Montana, South Carolina, and Texas all initiated changes in these areas although not all proposals passed. The basis for most of the proposed legislation concerning suitability was the NAIC model act, which focused on categories to be considered in determining suitability and record retention requirements placed upon carriers and agents alike. Some legislatures and agencies chose to expand already existing laws and regulations concerning suitability of annuity transactions to all annuity transactions despite the person’s age. 

Iowa

In 2007 Iowa joined steps taken by California in 2005, and lead the industry in requiring index annuity training. Unlike California, the Iowa requirement extends to index life insurance as well as index annuities. Included in the Unfair Trade Practices regulations, the new requirements set forth a specific training for producers and places an onus on carriers to make certain producers have completed the training prior to soliciting such products in the state. 

In addition to information on determining client suitability, the 4 hour course must cover the types of annuities, annuity contract provisions and riders, specific index strategies, the advantages and disadvantages of annuitization,  account value enhancements, policy owner considerations for consumers over age 65, and distinguishing characteristics of index life products. Unlike California, however, the Iowa requirement is a one time requirement, which may give California a leg up in keeping its agents up-to-date on new developments in the area of index annuities.

New York
Rhode Island

New York and Rhode Island addressed specific issues not part of other state’s legislative sessions. New York attempted to increase the levels of debtor exemptions in order to put New York residents on the same footing as residents of other states. The New York Senate attempted make the atmosphere in New York slightly friendlier to index annuities by proposing amendments to its non-forfeiture laws although limiting surrender periods and withdrawal charges. 

Rhode Island dealt with unsuitable annuity product sales to seniors who take advantage of reverse mortgages. The last action on that bill was a referral to the Senate Corporation committee.

· Look for a few more states to join the Interstate Insurance Product Regulation Compact.

· Enhancement in suitability and replacement regulations.

· Watch as California again attempts to introduce suitability language for annuity sales.  

·  It is also likely that additional training requirements for index products will be adopted by states and further restrictions on designations used in conjunction with insurance and annuity sales.