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AB 689 (Blumenfield), sponsored by the California Department of Insurance, passed the Assembly Appropriations Committee this week with a vote of 16-0.
AB 689 would create a regulatory process to require that insurance producers and insurers selling annuities have reasonable grounds to believe that the products they are recommending are suitable for consumers. More specifically, the bill would require insurance producers and insurers, when recommending to a consumer the purchase or exchange of an annuity, to have reasonable grounds for believing that the recommendation is suitable for the consumer. This bill is modeled after the National Association of Insurance Commissioners’ Annuity Suitability Model Regulation.
Amendments taken on May 4th to the bill; however, include some of the same minor changes to the Model Regulation that are included in the Department’s proposed annuity regulations. These minor changes cause some concern on the industry’s part. At the hearing, industry representatives testified in support of advancing the bill while the parties continue working on the language.