Sword or Shield - The NAIC's Proposed Life Insurance and Annuity Suitability Model Act and Regulation

At the recent Spring meeting of the National Association of Insurance Commissioners, the Suitability Working Group presented its final draft of the Life Insurance and Annuities Suitability Model Act and companion Model Regulation (collectively, the “Model Law”). The Model Law is intended to provide certain safeguards and guidelines in connection with recommendations by insurers and  producers for the purchase, sale and exchange of fixed life insurance and annuity products by consumers for personal or family insurance needs. Although the NAIC’s Life Insurance and Annuities  Committee deferred voting on the adoption of the Model Law, it is expected that some form of the model will be adopted at the upcoming Summer meeting in Philadelphia in June. As the heated debate  about the proposed model continues, one overarching issue for insurers and producers is whether and to what extent a state’s adoption of the model will affect litigation – Will the Model Law ultimately  function as a sword or a shield?