Amended  IN  Assembly  March 22, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1373

Introduced by Assembly Member Daly

February 17, 2017

An act to amend Section 10509.915 of the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 1373, as amended, Daly. Insurance: annuity.
Existing law prohibits an insurance producer from soliciting the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity and the insurance producer is in compliance with the insurer’s standards for product training. Existing law requires insurance producers, who are otherwise entitled to engage in the sale of annuity products, to complete training approved by the commissioner Insurance Commissioner and provided by a commissioner-approved education provider consisting of specified topics, including, but not limited to, the types of annuities and various classifications of annuities and how fixed, variable, and indexed annuity contract provisions affect consumers.
This bill would add model laws and regulations adopted by the National Association of Insurance Commissioners relating to the sale of annuities require an insurance producer soliciting the sale of an annuity product to provide the applicant with the appropriate deferred annuities buyer’s guide, as defined, adopted by the National Association of Insurance Commissioners, and would add those buyer’s guides to the list of training topics.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 10509.915 of the Insurance Code is amended to read:

10509.915.
 (a) (1) An insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity annuity, has provided the applicant with the appropriate buyer’s guide, and the insurance producer is in compliance with the insurer’s standards for product training. An insurance producer may rely on insurer-provided product-specific training standards and materials to comply with this subdivision.
(2) As used in this section, “buyer’s guide” means one of the following buyer’s guides adopted by the National Association of Insurance Commissioners:
(A) With respect to sales of fixed or fixed indexed annuities, either of the following:
(i) The Buyer’s Guide for Deferred Annuities (2013).
(ii) The Buyer’s Guide for Deferred Annuities Fixed (2013).
(B) With respect to sales of variable annuities, either of the following:
(i) The Buyer’s Guide for Deferred Annuities (2013).
(ii) The Buyer’s Guide for Deferred Annuities Variable (2013).
(b) (1) An insurance producer who is otherwise entitled to engage in the sale of annuity products shall complete a one-time eight credit-hour annuity training course approved by the commissioner and provided by a commissioner-approved education provider, prior to commencing the transaction of annuities, pursuant to subdivision (a) of Section 1749.8.
(2) In addition to the requirement set forth in paragraph (1), every producer who engages in this state in the sale of annuity products shall satisfactorily complete four continuing education credits prior to license renewal every two years, pursuant to subdivision (b) of Section 1749.8.
(3) The training required under this subdivision shall include information on all of the following topics:
(A) The types of annuities and various classifications of annuities.
(B) Identification of the parties to an annuity.
(C) How fixed, variable, and indexed annuity contract provisions affect consumers.
(D) The application of income taxation of qualified and nonqualified annuities.
(E) The primary uses of annuities.
(F) Prohibited sales practices, the recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an insurance product, and fraudulent and unfair trade practices, as well as replacement and disclosure requirements for sales of annuities, all as provided under California law, including, but not limited to, this article.

(G)Model laws and regulations adopted by the National Association of Insurance Commissioners relating to the sale of annuities.

(G) The buyer’s guides adopted by the National Association of Insurance Commissioners.
(4) Providers of courses intended to comply with this section shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline.
(5) A provider of an annuity training course intended to comply with this section shall register as a CE provider in this state and comply with the rules and guidelines applicable to insurance producer continuing education courses as set forth in subdivisions (d) and (e) of Section 1749.1, Section 1749.8, and in Sections 2188, 2188.1, 2188.2, 2188.3, 2188.4, 2188.50, 2188.6, 2188.7, 2188.8, 2188.50, and 2188.9 of Title 10 of the California Code of Regulations.
(6) Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with Sections 2188.2 and 2188.3 of Title 10 of the California Code of Regulations.
(7) Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with Section 2188.8 of Title 10 of the California Code of Regulations.
(8) An insurer shall verify that an insurance producer has completed the annuity training required under this section before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this paragraph by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.