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A: No, this law does not create a new license type for selling annuities. The current licenses that are sufficient for selling annuities, such as the producer license with the life and fixed annuities or variable life/variable line of authority will still be utilized in Pennsylvania.
A: Yes, all producers must complete a one-time training course that covers general annuity principles – including the types and uses of annuities, how annuity contract features affect consumers, and tax implications – as well as information about the new Best Interest standard of conduct, sale practices, and new replacement and disclosure requirements, among other requirements under Act 99. The specific training required depends on what prior training the producer has completed. See Section 403.1-B (b) of Act 99.
A: A licensed producer who has completed an annuity training under the prior annuity law (Suitability Standard or Act 48 of 2018) must complete either:
A new one-time four (4) credit training course that meets the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider
A one-time one (1) credit training course that covers the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider. Licensed producers must complete this new training by December 20, 2022.
If you are a licensed producer who has not completed the required CE credits before June 20, 2022, you must complete by December 20, 2022 the four (4) new credit training course that covers the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider.
If you are a licensed producer who has taken some but not all of the four (4) CE credit training courses by June 20, 2022, you must complete the remaining CE credits by December 20, 2022, which should include the one-time (1) credit training course that covers the new annuity best interest standard requirement.
A: New producers licensed on or after June 20, 2022 need to take the new four (4) credit training course that meets the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider as soon as the training is available. Under the law, this training course must be taken on or before the end of the insurance producer's next complete license period occurring after June 20, 2022.
A: All producers with the authority to sell annuities in Pennsylvania will need to satisfy the new CE requirement, which covers the new Best Interest Standard and replacements and disclosure requirements. This means that if you have the authority to sell annuities through your current license type, you must still complete this new training by December 20, 2022, even if you are not actively selling annuities. If this training requirement is not met, then the department could initiate an enforcement action.
A: Insurers are responsible for verifying that a licensed producer selling an annuity product in Pennsylvania on their behalf, is compliant with the new CE requirements.
A: Please go to Sircon to find approved CE courses related to the new Best Interest requirement. Click on "Approved Courses Inquiry" to begin a search.
A: It is an insurer's prerogative to ensure that all of its licensees comply with the CE requirement established through Act 99's provisions; therefore, an insurer may require the completion of the annuity suitability CE requirement in less time than is statutorily required.
A: Under Pennsylvania's law, if the training requirements of another state have been successfully completed by the producer and those training requirements are substantially similar to the mandatory training requirements found in Pennsylvania's Act 99, then the producer will be deemed compliant. Therefore, if you have already completed a training that complies with the NAIC's Best Interest Model Law or Regulation (2020) or a similar course that covers the new NAIC's Best Interest Standard, then you will be deemed compliant with the four-credit annuity suitability CE requirement or the one credit suitability requirement as applicable.
A: Act 99 introduces Best Interest Obligations a producer must take into consideration when recommending the purchase or replacement of an annuity. Under the new Best Interest standard, a producer must act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer's financial interest ahead of the consumer's interest.
A producer's Best Interest Obligations are met when the producer meets the law's (1) care obligations, (2) disclosure obligations, (3) conflicts of interest obligations; and (4) documentation obligations.
In order to make a recommendation, a producer must now consider all of the factors listed in Section 403-B(a)(1) of Act 99, which include (but are not limited to), knowing the consumer's financial situation, insurance needs, and financial objectives; understanding the available recommendations; having a reasonable basis to believe the recommended option addresses the consumer's financial situation, insurance needs, and financial objectives over the life of the product, as evaluated in light of the consumer profile information; and communicating the basis of the recommendation. For the specific requirements under the new Care Obligation, please see Section 403-B (a)(1) of Act 99.
A: Act 99 requires specific disclosures of the relationship between the producer and consumer, the products the producer is authorized or licensed to sell, and the producer's compensation. In addition, it requires the use of a disclosure form ("Insurance Agent [Producer] Disclosure for Annuities") signed by both the producer and consumer.
Below is a list of the new major disclosure requirements:
Consumer relationship – Before making a recommendation or selling an annuity, a producer must disclose in writing the scope and terms of the relationship with the consumer and the producer's role in the transaction.
Products – The producer must state which products the producer is licensed and authorized to sell (fixed, fixed-indexed, and variable annuities; life insurance; mutual funds; stocks and bonds; and certificates of deposit).
Insurers – The producer must provide a statement describing the insurers for which the producer is authorized, contracted, appointed, or otherwise able to sell insurance products
Compensation – The producer must also describe the sources and types of cash and non-cash compensation received, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of a premium or other remuneration received from the insurer, intermediary or other producer or by a fee as a result of a contract for advice or consulting services. The consumer also has the right to request additional information regarding cash compensation. Upon request, the producer must disclose a reasonable estimate of the amount of cash compensation to be received, which may be stated as a range of amounts or percentages; and whether it's a one-time or multiple occurrence amount, and if a multiple occurrence amount, the frequency and amount, which may be stated as a range of amounts or percentages.
For the specific requirements under the new Disclosure Obligations, please see Section 403-B (a)(2) of Act 99.
View an example of the disclosure form.
A: A producer must identify and avoid or reasonably manage and disclose material conflicts of interest, including material conflicts of interest related to an ownership interest. For the specific requirements under the new Care Obligation, please see Section 403-B (a)(3) of Act 99.
A: At the time of a recommendation or sale, a producer must document any recommendation and its basis in writing. Should a consumer refuse to provide consumer profile information, the producer must obtain a statement signed by the consumer that documents the consumer's refusal and the consumer's understanding of the implications of not providing consumer profile information. Furthermore, a producer must obtain a statement signed by the consumer acknowledging that the annuity transaction is not recommended if a consumer decides to buy an annuity that is not recommended by the producer. For the specific requirements under the new Document Obligation, please see Section 403-B (a)(4) of Act 99.
A: Check with the insurer offering the annuity product or your professional association if you have questions related to the requirements of Act 99. You can also click here to view Act 99 of 2021.