Insurers and producers have the following duties to ensure that annuities that are recommended are in the consumerâs best interest: (a) Best Interest Obligations. A producer, when making a recommendation of an annuity, shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producerâs or insurerâs financial interest ahead of the consumerâs interest. A producer has acted in the best interest of the consumer if they have satisfied all of the following obligations regarding care, disclosure, conflict of interest, and documentation: (1) Care Obligation. (A) The producer, in making a recommendation, shall exercise reasonable diligence, care, and skill to: (i) Know the consumerâs financial situation, financial needs, insurance needs, and financial objectives. (ii) Understand the available recommendation options after making a reasonable inquiry into options available to the producer. (iii) Have a reasonable basis to believe the recommended option effectively addresses the consumerâs financial situation, financial needs, insurance needs, and financial objectives over the life of the annuity, as evaluated in light of the consumer profile information. (iv) Have a reasonable basis to believe that the consumer would receive a tangible net benefit from the transaction over the life of the product. (v) Communicate the basis or bases of the recommendation to the consumer orally and in writing and to the insurer in writing. (B) The producerâs or insurerâs recommendation to the consumer shall be based on an evaluation of the consumerâs relevant consumer profile information and other relevant information, and shall reflect the care, skill, prudence, and diligence that a reasonable producer with similar authority and licensure who is familiar with those matters would use under the circumstances then prevailing. (C) The requirements under subparagraphs (A) and (B) include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity. (D) The requirements under subparagraphs (A) and (B) require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the consumerâs financial situation, insurance needs, and financial objectives. 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. (E) This subdivision does not create a fiduciary obligation or relationship and only creates a regulatory obligation as established in this article. (F) The consumer profile information, characteristics of the insurer, and product costs, rates, benefits, and features are factors generally relevant in making a determination whether an annuity effectively addresses the consumerâs financial situation, financial needs, insurance needs, and financial objectives, but the level of importance of each factor under the care obligation of this paragraph may vary depending on the facts and circumstances of a particular case. However, each factor shall not be considered in isolation. (G) The requirements under subparagraphs (A) and (B) 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. (H) The requirements under subparagraphs (A) and (B) 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. (I) The requirements under subparagraphs (A) and (B) do not mean the annuity with the lowest one-time or multiple
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