Bill > AB689

This bill establishes new "Suitability Requirements for Annuity Transactions" in California's Insurance Code to protect consumers, particularly seniors, from purchasing unsuitable annuity products. Annuities are long-term insurance products designed to provide income, often for retirement. The bill mandates that insurance producers and insurers must have reasonable grounds to believe that a recommended annuity transaction is suitable for a consumer based on their financial situation, needs, and objectives, which includes gathering specific "suitability information" such as age, income, financial experience, and risk tolerance. It requires producers to inform consumers about annuity features like surrender periods, surrender charges, potential tax penalties, fees, and market risks, and to ensure the consumer receives a tangible benefit from the transaction. For annuity exchanges or replacements, producers must consider potential surrender charges, loss of existing benefits, and increased fees, ensuring the new annuity offers a substantial benefit. Insurers are responsible for establishing a supervision system to ensure their producers comply with these requirements, including product training and review of recommendations. Insurance producers must also complete specific annuity training courses and continuing education credits. The bill clarifies that these requirements apply to individually solicited annuities, with certain exceptions for employer-sponsored retirement plans and other specific contracts. It also acknowledges that sales by FINRA broker-dealers that comply with specific FINRA rules may satisfy some of these requirements, provided they also consider the consumer's income and intended use of the annuity.