Nev. Admin. Code § 688A.Sec. 22 - NEW

1. Except as otherwise provided in section 21, an insurer may not issue an annuity which is recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer's financial situation, insurance needs and financial objectives based on the consumer profile information of the consumer.

2. An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the compliance of the insurer and its producers with sections 3 to 27, inclusive. As part of the supervision system, the insurer shall, without limitation:

(a) Establish and maintain reasonable procedures to inform its producers of the requirements of sections 3 to 27, inclusive and shall incorporate the requirements of sections 3 to 27, inclusive into relevant producer training manuals.

(b) Establish and maintain standards for producer product training and shall establish and maintain reasonable procedures to require its producers to comply with the requirements of section 25.

(c) Provide product-specific training and training materials which explain all material features of its annuity products to its producers.

(d) Establish and maintain procedures for the review of each recommendation prior to the issuance of an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular financial situation, insurance needs and financial objectives of the consumer. Such review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means, including, without limitation, physical review. Such an electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criterion.

(e) Establish and maintain reasonable procedures to detect recommendations that are not in compliance with sections 15 to 24, inclusive. This may include, without limitation, confirmation of the consumer profile information of the consumer, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations and programs of internal monitoring. Nothing in this paragraph prevents an insurer from complying with this paragraph by applying sampling procedures, or by confirming consumer profile information or other required information under sections 15 to 24, inclusive after issuance or delivery of the annuity.

(f) Establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under sections 15 to 24, inclusive.

(g) Establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information.

(h) Establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and non-cash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this paragraph are not intended to prohibit the receipt of health insurance, office rent, office support, retirement benefits or other employee benefits by employees as long as those benefits are not based upon the volume of sales of a specific annuity within a limited period of time.

(i) Annually provide a written report to senior management, including, without limitation, to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.

3. Nothing in this section restricts an insurer from contracting for performance of a function, including, without limitation, maintenance of procedures, required under this section. An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to section 26 regardless of whether the insurer contracts for performance of a function and regardless of the insurer's compliance with subsection 4.

4. An insurer's supervision system under this section shall include supervision of contractual performance under this section. This includes, without limitation, the following:

(a) Monitoring and, as appropriate, conducting audits to ensure that the contracted function is properly performed; and

(b) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.

5. An insurer is not required to include in its system of supervision:

(a) The recommendations of a producer to consumers of products other than the annuities offered by the insurer; or

(b) Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.

Notes

Nev. Admin. Code § 688A.Sec. 22

Added to NAC by Comm'r of Insurance by R109-23A, eff. 11/15/2024

NRS 679B.130