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SB644,3 9Section 3 . 628.347 (1) (ae) of the statutes is created to read:
SB644,3,1010 628.347 (1) (ae) “Comparable standards” means:
SB644,4,211 1. With respect to broker-dealers and registered representatives of
12broker-dealers, the applicable rules of the federal securities and exchange
13commission and FINRA pertaining to best interest obligations and supervision of

1annuity recommendations and sales, including Regulation Best Interest and any
2amendments or successor regulations thereto.
SB644,4,83 2. With respect to investment advisers registered under federal or state
4securities law and investment adviser representatives, the fiduciary duties and
5other requirements imposed on the investment adviser or investment adviser
6representative by contract or under the Investment Advisers Act of 1940 or
7applicable state securities law, including the federal form ADV and applicable
8interpretations.
SB644,4,129 3. With respect to plan fiduciaries and fiduciaries described in par. (ak) 3., the
10duties, obligations, prohibitions, and other requirements attendant to such status
11under the Employee Retirement Income Security Act of 1974 or the Internal Revenue
12Code.
SB644,4 13Section 4 . 628.347 (1) (ag) 13. and 14. of the statutes are created to read:
SB644,4,1414 628.347 (1) (ag) 13. Insurance needs.
SB644,4,1515 14. Financial resources used to fund the annuity.
SB644,5 16Section 5 . 628.347 (1) (ak) of the statutes is created to read:
SB644,4,1817 628.347 (1) (ak) “Financial professional” means an insurance intermediary
18who is regulated and acting as any of the following:
SB644,4,2019 1. A broker-dealer registered under federal or state securities law or a
20registered representative of such a broker-dealer.
SB644,4,2221 2. An investment adviser registered under federal or state securities law or an
22investment adviser representative associated with such an investment adviser.
SB644,4,24233. A plan fiduciary, as defined in 29 USC 1002 (21), or a fiduciary, as defined
24in section 4975 (e) (3) of the Internal Revenue Code.
SB644,6 25Section 6 . 628.347 (1) (ar) of the statutes is created to read:
SB644,5,4
1628.347 (1) (ar) “Material conflict of interest” means a financial interest of an
2insurance intermediary in the sale of an annuity that a reasonable person would
3expect to influence the impartiality of a recommendation, but does not include cash
4compensation or noncash compensation.
SB644,7 5Section 7 . 628.347 (1) (aw) of the statutes is created to read:
SB644,5,86 628.347 (1) (aw) “Noncash compensation” means any form of compensation
7that is not cash compensation, including health insurance, office rent, office support,
8and retirement benefits.
SB644,8 9Section 8 . 628.347 (1) (ax) of the statutes is created to read:
SB644,5,1510 628.347 (1) (ax) “Non-guaranteed elements” means the premiums, credited
11interest rates, benefits, values, dividends, noninterest based credits, and charges,
12along with the elements of formulas used to determine any of these items, that are
13subject to company discretion and are not guaranteed at issue. An element is a
14non-guaranteed element if any non-guaranteed elements are used in its calculation.
15For purposes of this subsection, credited interest rates include any bonus.
SB644,9 16Section 9 . 628.347 (1) (b) of the statutes is amended to read:
SB644,5,2317 628.347 (1) (b) “Recommendation" means advice provided by an insurance
18intermediary, or an insurer if no intermediary is involved, to an individual consumer
19that results in, or was intended to result in, the purchase, exchange, or replacement
20of an annuity in accordance with that advice, except that “recommendation” does not
21include general communication to the public, generalized customer service
22assistance or administrative support, general educational information and tools,
23prospectuses, and other product and sales materials
.
SB644,10 24Section 10. 628.347 (1) (e) of the statutes is renumbered 628.347 (1) (ag), and
25628.347 (1) (ag) (intro.), 3., 8. and 11., as renumbered, are amended to read:
SB644,6,4
1628.347 (1) (ag) (intro.) “Suitability Consumer profile information" means
2information that is reasonably appropriate to determine the suitability of whether
3a recommendation addresses the consumer's financial situation, insurance needs,
4and financial objectives
, including all of the following:
SB644,6,65 3. Financial situation and needs, including the financial resources used for the
6funding of the annuity
debts and other obligations.
SB644,6,87 8. Existing assets and financial products, including investment, annuity, and
8life insurance holdings.
SB644,6,109 11. Risk tolerance, including willingness to accept non-guaranteed elements
10in the annuity
.
SB644,11 11Section 11 . 628.347 (2) of the statutes is repealed and recreated to read:
SB644,6,2112 628.347 (2) Best interest obligations. (a) When making a recommendation
13of an annuity, an insurance intermediary shall act in the best interest of the
14consumer under the circumstances known at the time the recommendation is made,
15without placing the financial interest of the intermediary or insurer ahead of the
16consumer's interest. An insurance intermediary has acted in the best interest of the
17consumer if the intermediary has satisfied the care obligation under sub. (2b), the
18disclosure obligation under sub. (2c), the conflict of interest obligation under sub.
19(2d), and the documentation obligation under sub. (2e). The requirements under this
20subsection and subs. (2b) to (2e) create only a regulatory obligation and do not create
21a fiduciary obligation or relationship.
SB644,7,422 (b) Any requirement applicable to an insurance intermediary under this
23subsection shall apply to every insurance intermediary who exercises material
24control or influence in the making of a recommendation and has received direct
25compensation as a result of the recommendation or sale, regardless of whether the

1intermediary has any direct contact with the consumer. Activities such as providing
2or delivering marketing or educational materials, product wholesaling or other back
3office product support, and conducting general supervision of an insurance
4intermediary do not, in and of themselves, constitute material control or influence.
SB644,12 5Section 12. 628.347 (2b) of the statutes is created to read:
SB644,7,86 628.347 (2b) Care obligation. (a) In making a recommendation, an insurance
7intermediary shall exercise reasonable diligence, care, and skill to do all of the
8following:
SB644,7,109 1. Know the consumer's financial situation, insurance needs, and financial
10objectives.
SB644,7,1211 2. Understand the available recommendation options after making a
12reasonable inquiry into the options available to the intermediary.
SB644,7,1613 3. Have a reasonable basis to believe the recommended option effectively
14addresses the consumer's financial situation, insurance needs, and financial
15objectives over the life of the product, as evaluated in light of the consumer profile
16information.
SB644,7,1717 4. Communicate the basis or bases of the recommendation to the consumer.
SB644,7,1918 (b) The requirements imposed on an insurance intermediary under par. (a)
19include all of the following:
SB644,7,2220 1. Having a reasonable basis to believe the consumer would benefit from
21certain features of the annuity, such as tax-deferred growth, annuitization, a death
22or living benefit, or other insurance-related features.
SB644,7,2423 2. Making reasonable efforts to obtain consumer profile information from the
24consumer prior to the recommendation.
SB644,8,8
13. Considering the types of products the intermediary is authorized and
2licensed to recommend or sell that address the consumer's financial situation,
3insurance needs, and financial objectives. Nothing in this subdivision requires
4analysis or consideration of products outside the authority and license of the
5intermediary or other possible alternative products or strategies available in the
6market at the time of the recommendation. Under this subdivision, an intermediary
7shall be held to standards applicable to intermediaries with similar authority and
8licensure.
SB644,8,129 (be) If consumer profile information is obtained by an insurance intermediary,
10the insurance intermediary may not conceal the information from the insurer, and
11an insurance intermediary may not otherwise dissuade or attempt to dissuade the
12consumer from providing the information.
SB644,8,1613 (c) The requirements under this subsection shall apply to the annuity as a
14whole, the underlying subaccounts to which funds are allocated at the time of
15purchase or exchange of the annuity, and any riders and similar product
16enhancements.
SB644,8,2217 (d) The factors generally relevant in determining under this subsection
18whether an annuity effectively addresses the consumer's financial situation,
19insurance needs, and financial objectives shall be the consumer profile information,
20characteristics of the insurer, and product costs, rates, benefits and features. The
21level of importance of each factor may vary depending on the facts and circumstances
22of a particular case, and no factor may be considered in isolation.
SB644,8,2423 (e) Nothing in this subsection requires that an annuity with the lowest
24one-time or multiple occurrence compensation structure be recommended.
SB644,9,4
1(f) Nothing in this subsection requires that the insurance intermediary have
2an ongoing monitoring obligation, although such obligation may be separately owed
3under the terms of a fiduciary, consulting, investment advising, or financial planning
4agreement between the consumer and intermediary.
SB644,9,75 (g) In the case of an exchange or replacement of an annuity, the insurance
6intermediary shall consider the whole transaction, which includes taking into
7consideration all of the following:
SB644,9,118 1. Whether the consumer will incur a surrender charge, be subject to the
9commencement of a new surrender period, lose existing benefits, including death,
10living, or other contractual benefits, or be subject to increased fees, investment
11advisory fees, or charges for riders and similar product enhancements.
SB644,9,1312 2. Whether the replacing product would substantially benefit the consumer in
13comparison to the replaced product over the life of the product.
SB644,9,1514 3. Whether the consumer has had another annuity exchange or replacement,
15particularly within the preceding 60 months.
SB644,9,1716 (h) 1. Subject to subd. 2., an insurance intermediary shall have no obligation
17to a consumer under this subsection if any of the following applies:
SB644,9,1818 a. The intermediary made no recommendation.
SB644,9,2019 b. The intermediary made a recommendation that is later found to have been
20prepared based on inaccurate material information provided by the consumer.
SB644,9,2221 c. The consumer refuses to provide relevant consumer profile information and
22the annuity transaction is not recommended.
SB644,9,2423 d. The consumer decides to enter into an annuity transaction that is not based
24on a recommendation made by the intermediary.
SB644,10,3
12. An insurer's issuance of an annuity under the circumstances specified in
2subd. 1. a. to d. shall be reasonable under all circumstances actually known to the
3insurer at the time the annuity is issued.
SB644,13 4Section 13. 628.347 (2c) of the statutes is created to read:
SB644,10,95 628.347 (2c) Disclosure obligation. (a) Prior to the recommendation or sale
6of an annuity, an insurance intermediary shall prominently disclose to the consumer,
7on a form substantially similar to Appendix A of the National Association of
8Insurance Commissioners Annuity Suitability Model Regulation that shall be posted
9on the office's Internet site, all of the following information:
SB644,10,1110 1. A description of the scope and terms of the intermediary's relationship with
11the consumer and the role of the intermediary in the transaction.
SB644,10,1412 2. An affirmative statement on whether the intermediary is licensed and
13authorized to sell fixed annuities, fixed indexed annuities, variable annuities, life
14insurance, mutual funds, stocks, bonds, and certificates of deposit.
SB644,10,1715 3. An affirmative statement describing the insurers for which the intermediary
16is authorized, contracted, appointed, or otherwise able to sell insurance products,
17using whichever of the following descriptions is appropriate:
SB644,10,1818 a. From one insurer.
SB644,10,1919 b. From 2 or more insurers.
SB644,10,2020 c. From 2 or more insurers although primarily contracted with one insurer.
SB644,11,221 4. A description of the sources and types of cash compensation and noncash
22compensation to be received by the intermediary, including whether the
23intermediary is to be compensated for the sale of a recommended annuity by
24commission as part of a premium or other remuneration received from the insurer

1or another intermediary, or by fee as a result of a contract for advice or consulting
2services.
SB644,11,43 5. A notice of the consumer's right to request additional information regarding
4cash compensation.
SB644,11,65 (b) Upon request of the consumer or the consumer's designated representative,
6an insurance intermediary shall disclose all of the following:
SB644,11,87 1. A reasonable estimate of the amount of cash compensation to be received by
8the intermediary, which may be stated as a range of amounts or percentages.
SB644,11,119 2. Whether the cash compensation is a one-time or multiple occurrence amount
10and, if a multiple occurrence amount, the frequency and amount of the occurrence,
11which may be stated as a range of amounts or percentages.
SB644,11,1912 (c) Prior to or at the time of the recommendation or sale of an annuity, the
13insurance intermediary shall have a reasonable basis to believe the consumer has
14been informed of various features of the annuity, including the potential surrender
15period and surrender charges, potential tax penalty if the consumer sells, exchanges,
16surrenders, or annuitizes the annuity, mortality and expense fees, investment
17advisory fees, annual fees, potential charges for and features of riders and other
18options, limitations on interest returns, potential changes in non-guaranteed
19elements of the annuity, insurance and investment components, and market risk.
SB644,14 20Section 14. 628.347 (2d) of the statutes is created to read:
SB644,11,2321 628.347 (2d) Conflict of interest obligation. An insurance intermediary
22shall identify and avoid or reasonably manage and disclose material conflicts of
23interest, including material conflicts related to an ownership interest.
SB644,15 24Section 15. 628.347 (2e) of the statutes is created to read:
SB644,12,3
1628.347 (2e) Documentation obligation. An insurance intermediary shall, at
2the time of making a recommendation or sale of an annuity, do all of the following,
3as applicable:
SB644,12,54 (a) If an annuity is recommended, make a written record of any
5recommendation and the basis for the recommendation subject to this section.
SB644,12,106 (b) If a consumer refuses to provide consumer profile information, obtain a
7signed statement from the consumer, on a form substantially similar to Appendix B
8of the National Association of Insurance Commissioners Annuity Suitability Model
9Regulation that shall be posted on the office's Internet site, that documents all of the
10following:
SB644,12,1111 1. A consumer's refusal to provide consumer profile information.
SB644,12,1412 2. A consumer's understanding of the ramifications of not providing his or her
13consumer profile information or of providing insufficient consumer profile
14information.
SB644,12,2015 (c) If an annuity is not recommended, obtain a signed statement from the
16consumer, on a form substantially similar to Appendix C of the National Association
17of Insurance Commissioners Annuity Suitability Model Regulation that shall be
18posted on the office's Internet site, that acknowledges an annuity transaction is not
19recommended if the consumer decides to enter into an annuity transaction that is not
20based on the intermediary's recommendation.
SB644,16 21Section 16 . 628.347 (3) (a) 4. of the statutes is amended to read:
SB644,13,522 628.347 (3) (a) 4. Maintain procedures for review of each recommendation
23before issuance of an annuity that are designed to ensure that there is a reasonable
24basis to determine that a recommendation is suitable would effectively address a
25consumer's financial situation, insurance needs, and financial objectives
. An

1insurer's procedures may apply a screening system for the purpose of identifying
2selected transactions for additional review. An insurer's procedures may be
3accomplished electronically or through other means, including physical review. An
4electronic or other system may be designed to require additional review only of those
5transactions identified for additional review by the selection criteria.
SB644,17 6Section 17 . 628.347 (3) (a) 5. of the statutes is amended to read:
SB644,13,147 628.347 (3) (a) 5. Maintain reasonable procedures to detect recommendations
8that are not suitable do not comply with subs. (2) to (2e), which may include
9confirmation of consumer suitability profile information, systematic customer
10surveys, interviews, confirmation letters, producer statements or attestations, and
11programs of internal monitoring. Nothing in this subdivision prevents an insurer
12from complying with this subdivision by applying sampling procedures or by
13confirming suitability consumer profile information after issuance or delivery of the
14annuity, or both.
SB644,18 15Section 18 . 628.347 (3) (a) 7., 8. and 9. of the statutes are created to read:
SB644,13,1916 628.347 (3) (a) 7. Establish and maintain reasonable procedures to assess,
17prior to or upon issuance or delivery of an annuity, whether an insurance
18intermediary has provided to a consumer the information required to be provided
19under this section.
SB644,13,2120 8. Establish and maintain reasonable procedures to identify and address
21suspicious refusals by consumers to provide consumer profile information.
SB644,14,322 9. Establish and maintain reasonable procedures to identify and eliminate any
23sales contests, sales quotas, bonuses, and noncash compensation that are based on
24the sales of specific annuities within a limited period of time. Nothing in this
25subdivision prohibits the receipt of health insurance, office rent, office support,

1retirement benefits, or other employee benefits by employees so long as those
2benefits are not based upon the volume of sales of a specific annuity within a limited
3period of time.
SB644,19 4Section 19 . 628.347 (3) (am) of the statutes is created to read:
SB644,14,95 628.347 (3) (am) Except as permitted under sub. (2b) (h), an insurer may not
6issue an annuity recommended to a consumer unless there is a reasonable basis to
7believe the annuity will effectively address the particular consumer's financial
8situation, insurance needs, and financial objectives based on the consumer's
9consumer profile information.
SB644,20 10Section 20 . 628.347 (3) (c) of the statutes is amended to read:
SB644,14,1511 628.347 (3) (c) An insurer is not required to include in its system of supervision
12an insurance intermediary's recommendations to consumers of products other than
13the annuities offered by the insurer or include consideration of, or comparison to,
14options available to the intermediary or compensation relating to those options other
15than annuities or other products offered by the insurer
.
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