Hawaii Suitability in Annuity Transactions
The New Best Interest Requirement
Hawaii DCCA recently updated their requirements for Suitability in Annuity Transactions as a result of HB No. 2111. The regulation states that licensed insurance producers who hold a life insurance line of authority in Hawaii and want to sell annuities on or after July 1, 2023, must take an Annuity Best Interest (Annuity BI) certification course offered by an approved continuing education provider. The updated training courses will include adopted NAIC’s 2020 Model Law #275 best-interest standards, which among other changes, outline the requirement for producers to act in the best interest of the consumer at the time the annuity recommendation is made.
The topics that must be covered by the training course are set out in the regulation and shall include information on:
- The types and various classifications of annuities available on the market
- Identification of the parties to an annuity
- How fixed, variable, and indexed annuity contract provisions affect consumers
- The application of income taxation to qualified and non-qualified annuities
- The primary uses of annuities
- Appropriate standard of conduct, sales practices, replacement, and disclosure requirements
New Hawaii Suitability Training Requirement
A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training.
A producer who is authorized to sell annuity products on or before December 31, 2022 shall complete by July 1, 2023, a one-time training course on annuity products by completing either:
- A new four-credit training course approved by the commissioner after December 31, 2022; or
- An additional one-credit training course approved by the commissioner and provided by an approved education provider on appropriate sales practices, replacement, and disclosure requirements under this part.
A producer who obtains a life or variable life and variable annuity products line of authority after December 31, 2022, shall not engage in the sale of annuities until the producer has completed training meeting the requirements of this regulation.
Frequently Asked Questions
Who needs to complete the new training?
All producers who engage in the sale of annuities in the state of Hawaii, including those registered with FINRA, must complete the training required by the revised model.
When is the Hawaii Suitability in Annuity Transactions training due?
Producers who already took an Annuity Suitability program and who are currently certified to sell annuities in Hawaii need to complete either:
1-Hour Annuity Best Interest course by July 1, 2023
4-Hour Annuity Best Interest course after July 1, 2023 and before the sale, solicitation or negotiation of an annuity product in Hawaii.
A producer who has NOT completed the Annuity Suitability training requirements under the prior version of the model must complete the required training by July 1, 2023 or before the sale, solicitation or negotiation of an annuity product in Hawaii.
What if a producer does not complete the required training?
A producer who fails to satisfy the training requirements is not permitted to recommend or sell annuities. A producer who recommends or sells annuities without completing the required training may face enforcement action by the Hawaii DCCA.
Will a producer get CE credit for taking the new annuity best interest training?
Yes, courses must be taken through an approved continuing education provider. The course approval should indicate a course category of “Life/Annuity-Best Interest”. These courses are approved for insurance continuing education towards your license renewal and it is the education providers responsibility to post these credits to your transcript. InsuranceStudy will have both courses available in our catalog at https://www.insurancestudy.com/courses/hawaii-insurance-continuing-education. Courses for Annuity Suitability training will be available upon approval by the Hawaii DCCA.
How does a producer show that they have met the new annuity best interest training requirement?
The producer may be asked by the insurer to provide a certificate of completion of the training course in order to satisfy the insurer’s responsibility under the Regulation. Certificates of Completion are provided by InsuranceStudy at the completion of your course and can be downloaded at any time from your course dashboard. Additionally, InsuranceStudy is an approved ClearCert provider and all course completions will be reported to ClearCert so that carriers may verify a producer’s certification status at any time. It is the insurer’s responsibility to verify that the producer has completed the training.