New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 9 - LIFE INSURANCE AND ANNUITIES › Part 20 - SUITABILITY IN ANNUITY TRANSACTIONS › Section 13.9.20.9 - DUTIES OF INSURERS AND INSURANCE PRODUCERS

Current through Register Vol. 35, No. 13, July 16, 2024
A.
Best interest obligations.
An
				insurance producer, when making a recommendation of an annuity, shall act in
				the best interest of the consumer under the circumstances known at the time the
				recommendation is made, without placing the insurance producer's or the
				insurer's financial interest ahead of the consumer's interest. An insurance
				producer has acted in the best interest of the consumer if the insurance
				producer has satisfied the following obligations regarding care, disclosure,
				conflict of interest and documentation as outlined in this rule.
(1)
Care obligation.
An
				insurance producer, in making a recommendation, shall exercise reasonable
				diligence, care and skill to:
(a) know the
				consumer's financial situation, insurance needs and financial
				objectives;
(b) understand the
				available recommendation options after making a reasonable inquiry into options
				available to the insurance producer;
(c) have a reasonable basis to believe the
				recommended option effectively addresses the consumer's financial situation,
				insurance needs and financial objectives over the life of the product, after
				consideration of the information provided in the consumer profile
				information;
(d) communicate the
				basis or bases of the recommendation;
(e) make reasonable efforts to obtain
				consumer profile information from the consumer before the recommendation of an
				annuity;
(f) consider the types of
				products the insurance producer is authorized and licensed to recommend or sell
				that address the consumer's financial situation, insurance needs and financial
				objectives. This does not require analysis or consideration of any products
				outside the authority and license of the insurance producer or other possible
				alternative products or strategies available in the market at the time of the
				recommendation. An insurance producer shall be held to standards applicable to
				insurance producers with similar authority and licensure;
(g) consider the consumer profile
				information, characteristics of the insurer and product cost, rates, benefits
				and features in making a determination whether an annuity effectively addresses
				the consumer's financial situation, insurance needs and financial objectives,
				while understanding that:
(i) the level of
				importance of each factor of the care obligation may vary depending on the
				facts and circumstances of a particular case; and
(ii) each factor shall not be considered in
				isolation.
(h) in the
				case of an exchange or replacement of an annuity, consider the whole
				transaction, which includes consideration of whether:
(i) the consumer will incur a surrender
				charge, be subject to the commencement of a new surrender period, lose existing
				benefits such as death, living or other contractual benefits, or be subject to
				increased fees, investment advisory fees or charges for riders and similar
				product enhancements;
(ii) the
				replacing product would substantially benefit the consumer in comparison to the
				replaced product over the life of the product; and
(iii) the consumer has had another annuity
				exchange or replacement and in particular, an exchange or replacement within
				the preceding 60 months.
(i) The care obligation requirements of this
				rule:
(i) include having a reasonable basis to
				believe the consumer would benefit from certain features of the annuity, such
				as annuitization, death or living benefit or other insurance-related features;
				apply to a particular annuity as a whole and to the underlying subaccounts to
				which funds are allocated at the time of annuity purchase or exchange and to
				riders and similar producer enhancements, if any;
(ii) do not require recommendation in all
				situations of an annuity with the lowest one-time or multiple occurrence
				compensation structure;
(iii) do
				not impose additional ongoing monitoring obligations on a producer, but such
				obligations may be separately owed under the terms of a fiduciary, consulting,
				investment advising or financial planning agreement between the producer and a
				consumer; and
(iv) do not create a
				fiduciary obligation or relationship.