Section 688A.Sec. 16 - NEW1. The producer, in making a recommendation, shall exercise reasonable diligence, care and skill to: (a) Know the financial situation, insurance needs and financial objectives of the consumer;(b) Understand the available recommendation options after making a reasonable inquiry into options available to the producer;(c) Have a reasonable basis to believe the recommended option effectively addresses the financial situation, insurance needs and financial objectives of the consumer over the life of the product, as evaluated in light of the consumer profile information; and(d) Communicate the basis or bases of the recommendation.2. The requirements under subsection 1 include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity.3. The requirements under subsection 1 require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the financial situation, insurance needs and financial objectives of the consumer. This does not require analysis or consideration of any products outside the authority and license of the producer or other possible alternative products or strategies available in the market at the time of the recommendation. Producers shall be held to standards applicable to producers with similar authority and licensure.4. The requirements under sections 16 to 19, inclusive do not create a fiduciary obligation or relationship and only create a regulatory obligation as established by sections 3 to 27, inclusive.5. The consumer profile information, characteristics of the insurer, and product costs, rates, benefits and features are those factors generally relevant in making a determination whether an annuity effectively addresses the financial situation, insurance needs and financial objectives of the consumer, but the level of importance of each factor under this section may vary depending on the facts and circumstances of a particular case. However, each factor may not be considered in isolation.6. The requirements under subsection 1 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.7. The requirements under subsection 1 apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any.8. The requirements under subsection 1 do not mean the annuity with the lowest one-time or multiple occurrence compensation structure shall necessarily be recommended.9. The requirements under subsection 1 do not mean the producer has ongoing monitoring obligations under the care obligation set forth in this section, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising or financial planning agreement between the consumer and the producer.10. In the case of an exchange or replacement of an annuity, the producer shall consider the whole transaction, which includes taking into consideration whether: (a) 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;(b) The replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product; and(c) The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months.11. Nothing in sections 3 to 27, inclusive should be construed to require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit or negotiate insurance in this State, including, without limitation, any securities license, in order to fulfill the duties and obligations contained in sections 3 to 27, inclusive, provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.Nev. Admin. Code § 688A.Sec. 16
Added to NAC by Comm'r of Insurance by R109-23A, eff. 11/15/2024