Designations: NAIC Approach

Regulating the Use of Designations—States Following the NAIC Model Approach

Legislators, regulators and the media have raised concerns that senior citizens were being misled and harmed by the use of certain designations and certifications by insurance agents and advisors that may imply a level of expertise regarding senior affairs and financial matters that did not exist. In addition to being harmful to consumers, these types of allegations are potentially damaging to NAIFA members because they could affect the reputation of all agents and advisors and could compromise the public’s trust in insurance agents.

NAIFA has been engaged in this issue since 2007, meeting with staff and key members of the Senate Aging Committee (which held a hearing and introduced legislation on the issue), the North American Securities Administrators Association, the National Association of Insurance Commissioners, the National Conference of Insurance Legislators, the American College and the ACLI.

NAIFA staff testified at NAIC National Meetings in 2007 and 2008, and our state associations were involved in state-level regulatory activity. NAIFA also filed comment letters with the NAIC, NASAA and the Senate Aging Committee regarding draft legislation, rules and bulletins proposed by these groups, and produced a policy statement.

In 2008, the NAIC adopted an Insurer and Producer Bulletin and Consumer Alert designed to guide insurers/producers and assist consumers with respect to the appropriate use of senior designations. Also in 2008, the NAIC’s Life Insurance and Annuities (A) Committee approved a new Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities. NAIFA joined other groups in support of the NAIC effort.

Neither model references specific designations; rather, individual designations will be measured against this standard. The models establish what is essentially a safe harbor for designations that (i) are not primarily sales/marketing oriented and (ii) are issued/accredited by the American National Standards Institute, the National Commission for Certifying Agencies, or an institution of higher education. The models also expressly prohibit the use of designations that have not been legitimately earned, that are nonexistent, or that misrepresent a level of expertise or education that does not exist.

The NAIC model applies to the sale of insurance-related products; the NASAA rule covers sales of securities and other investment-oriented products. If both models were to be adopted by a state, the state would have a consistent regulatory program in place to address the use of senior-specific designations in the marketing of both insurance and investment products.

In 2012, NAIFA played an instrumental role in the adoption by NCOIL of a resolution urging state regulators to adopt the NAIC and NCOIL models. To date, the current version of the NAIC and/or NASAA model regulations governing the use of senior designations have been adopted by over 30 states, and other states have chosen other approaches to regulate the use of designations.  
The following states have adopted a regulation on the use of designations that parallels the current version of the NAIC model regulation: Alabama; Alaska; Arkansas; Colorado; Connecticut; District of Columbia; Illinois; Indiana; Iowa; Kansas; Minnesota; Missouri; Nevada; New Hampshire; New Jersey; New Mexico; New York; North Carolina; Ohio; Oklahoma; Oregon; Rhode Island; South Carolina; South Dakota; Texas; Utah; Vermont; Virginia; West Virginia; Wisconsin; Wyoming.