SB572,5,32 3. Financial situation and needs, including the financial resources used for the
3funding of the annuity.
SB572,5,44 4. Financial experience.
SB572,5,55 5. Financial objectives.
SB572,5,66 6. Intended use of the annuity.
SB572,5,77 7. Financial time horizon.
SB572,5,88 8. Existing assets, including investment and life insurance holdings.
SB572,5,99 9. Liquidity needs.
SB572,5,1010 10. Liquid net worth.
SB572,5,1111 11. Risk tolerance.
SB572,5,1212 12. Tax status.
SB572, s. 7 13Section 7. 628.347 (2) (title) of the statutes is amended to read:
SB572,5,1514 628.347 (2) (title) Duties of insurers and insurance intermediaries with
15regard to recommendations
and issuance of annuities .
SB572, s. 8 16Section 8. 628.347 (2) (a) of the statutes is renumbered 628.347 (2) (a) (intro.)
17and amended to read:
SB572,6,218 628.347 (2) (a) (intro.) Except as provided in par. (c), an insurance
19intermediary, or insurer if no intermediary is involved, may not recommend
In
20recommending
to a consumer the purchase of an annuity, or the exchange of an
21annuity if the recommendation that results in an insurance transaction or series of
22insurance transactions unless the, an insurance intermediary, or insurer has if no
23intermediary is involved, shall have
reasonable grounds to believe that the
24recommendation is suitable for the consumer on the basis of facts disclosed by the
25consumer as to his or her investments, other insurance products, and financial

1situation and needs., including the consumer's suitability information, and that all
2of the following are true:
SB572, s. 9 3Section 9. 628.347 (2) (a) 1. of the statutes is created to read:
SB572,6,94 628.347 (2) (a) 1. The consumer has been reasonably informed of various
5features of the annuity, such as the potential surrender period and surrender charge,
6potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the
7annuity, mortality and expense fees, investment advisory fees, potential charges for
8and features of riders, limitations on interest returns, insurance and investment
9components, and market risk.
SB572, s. 10 10Section 10. 628.347 (2) (a) 2. of the statutes is created to read:
SB572,6,1211 628.347 (2) (a) 2. The consumer would benefit from certain features of the
12annuity, such as tax-deferred growth, annuitization, or death or living benefit.
SB572, s. 11 13Section 11. 628.347 (2) (a) 3. of the statutes is created to read:
SB572,6,1814 628.347 (2) (a) 3. The particular annuity as a whole, the underlying
15subaccounts to which funds are allocated at the time of purchase or exchange of the
16annuity, and riders and similar product enhancements, if any, are suitable, and in
17the case of an exchange or replacement, the transaction as a whole is suitable, for the
18particular consumer based on his or her suitability information.
SB572, s. 12 19Section 12. 628.347 (2) (a) 4. of the statutes is created to read:
SB572,6,2220 628.347 (2) (a) 4. In the case of an exchange or replacement of an annuity, the
21exchange or replacement is suitable, including taking into consideration all of the
22following:
SB572,7,223 a. Whether the consumer will incur a surrender charge, be subject to the
24commencement of a new surrender period, lose existing benefits, such as death,

1living, or other contractual benefits, or be subject to increased fees, investment
2advisory fees, or charges for riders and similar product enhancements.
SB572,7,43 b. Whether the consumer would benefit from product enhancements and
4improvements.
SB572,7,65 c. Whether the consumer has had another annuity exchange or replacement
6and, in particular, an exchange or replacement within the preceding 36 months.
SB572, s. 13 7Section 13. 628.347 (2) (b) (intro.) of the statutes is renumbered 628.347 (2)
8(b) and amended to read:
SB572,7,129 628.347 (2) (b) Before making a recommendation described in par. (a), an
10insurance intermediary, or insurer if no intermediary is involved, shall make
11reasonable efforts to obtain the consumer's suitability information concerning all of
12the following:
.
SB572, s. 14 13Section 14. 628.347 (2) (b) 1. of the statutes is repealed.
SB572, s. 15 14Section 15. 628.347 (2) (b) 2. of the statutes is repealed.
SB572, s. 16 15Section 16. 628.347 (2) (b) 3. of the statutes is repealed.
SB572, s. 17 16Section 17. 628.347 (2) (b) 4. of the statutes is repealed.
SB572, s. 18 17Section 18. 628.347 (2) (bm) of the statutes is created to read:
SB572,7,2118 628.347 (2) (bm) Except as permitted under par. (c), an insurer may not issue
19an annuity that is recommended by the insurer or its insurance intermediary to a
20consumer unless it is reasonable to believe that the annuity is suitable based on the
21consumer's suitability information.
SB572, s. 19 22Section 19. 628.347 (2) (c) of the statutes is repealed and recreated to read:
SB572,7,2523 628.347 (2) (c) 1. Subject to subd. 2., neither an insurance intermediary nor an
24insurer has any obligation to a consumer under par. (a) or (bm) related to any annuity
25transaction if any of the following applies:
SB572,8,2
1a. Neither the insurance intermediary nor the insurer made a
2recommendation.
SB572,8,53 b. The insurance intermediary or insurer made a recommendation but the
4recommendation was later found to have been prepared based on inaccurate
5material information provided by the consumer.
SB572,8,76 c. The consumer refuses to provide relevant suitability information and the
7annuity transaction is not recommended.
SB572,8,98 d. The consumer decides to enter into an annuity transaction that is not based
9on a recommendation of the insurer or the insurance intermediary.
SB572, s. 20 10Section 20. 628.347 (2) (d) of the statutes is renumbered 628.347 (2) (c) 2. and
11amended to read:
SB572,8,1612 628.347 (2) (c) 2. Any recommendation of an insurer or insurance intermediary
13that, under par. (c), is not subject to the obligation under par. (a)
An insurer's
14issuance of an annuity under circumstances specified in subd. 1. a. to d.
shall be
15reasonable under all circumstances actually known to the insurer or insurance
16intermediary
at the time the recommendation is made annuity is issued.
SB572, s. 21 17Section 21. 628.347 (2) (dm) of the statutes is created to read:
SB572,8,1918 628.347 (2) (dm) An insurance intermediary, or insurer if no intermediary is
19involved, shall at the time of sale do all of the following:
SB572,8,2020 1. Make a record of any recommendation subject to par. (a).
SB572,8,2221 2. Obtain a customer-signed statement documenting a customer's refusal, if
22any, to provide suitability information.
SB572,9,223 3. If a customer decides to enter into an annuity transaction that is not based
24on the insurance intermediary's or insurer's recommendation, obtain a

1customer-signed statement acknowledging that the annuity transaction is not
2recommended by the intermediary or insurer.
SB572, s. 22 3Section 22. 628.347 (3) of the statutes is repealed and recreated to read:
SB572,9,74 628.347 (3) Insurer's supervisory responsibility. (a) An insurer shall
5establish a supervision system that is reasonably designed to achieve the insurer's
6and its insurance intermediaries' compliance with this section. Under the system,
7the insurer shall do at least all of the following:
SB572,9,108 1. Maintain reasonable procedures to inform its insurance intermediaries of
9the requirements of this section and incorporate the requirements of this section into
10relevant insurance intermediary training manuals.
SB572,9,1311 2. Establish standards for insurance intermediary product training and
12maintain reasonable procedures to require its insurance intermediaries to comply
13with the requirements of sub. (4m).
SB572,9,1514 3. Provide product-specific training and training materials that explain all
15material features of its annuity products to its insurance intermediaries.
SB572,9,2316 4. Maintain procedures for review of each recommendation before issuance of
17an annuity that are designed to ensure that there is a reasonable basis to determine
18that a recommendation is suitable. An insurer's procedures may apply a screening
19system for the purpose of identifying selected transactions for additional review. An
20insurer's procedures may be accomplished electronically or through other means,
21including physical review. An electronic or other system may be designed to require
22additional review only of those transactions identified for additional review by the
23selection criteria.
SB572,9,2524 5. Maintain reasonable procedures to detect recommendations that are not
25suitable, which may include confirmation of consumer suitability information,

1systematic customer surveys, interviews, confirmation letters, and programs of
2internal monitoring. Nothing in this subdivision prevents an insurer from
3complying with this subdivision by applying sampling procedures or by confirming
4suitability information after issuance or delivery of the annuity, or both.
SB572,10,85 6. Annually provide a report to senior management, including to the senior
6manager responsible for audit functions, that details a review, with appropriate
7testing, that is reasonably designed to determine the effectiveness of the supervision
8system, the exceptions found, and corrective action taken or recommended, if any.
SB572,10,149 (b) 1. Nothing in this subsection restricts an insurer from contracting for the
10performance of a function required par. (a), including maintenance of procedures.
11An insurer is responsible for taking appropriate corrective action and may be subject
12to, sanctions and penalties under subs. (5) and (6), regardless of whether the insurer
13contracts for the performance of a function and regardless of the insurer's compliance
14with subd. 2.
SB572,10,1615 2. An insurer's supervision system under par. (a) shall include supervision of
16any contractual performance under this subsection, including all of the following:
SB572,10,1817 a. Monitoring and, as appropriate, conducting audits to ensure that the
18contracted function is properly performed.
SB572,10,2119 b. Annually obtaining a certification from a senior manager who has
20responsibility for the contracted function that the manager has a reasonable basis
21to represent, and does represent, that the function is properly performed.
SB572,10,2422 (c) An insurer is not required to include in its system of supervision an
23insurance intermediary's recommendations to consumers of products other than the
24annuities offered by the insurer.
SB572, s. 23 25Section 23. 628.347 (3m) of the statutes is created to read:
SB572,11,3
1628.347 (3m) Prohibited acts of intermediary. An insurance intermediary
2may not dissuade, or attempt to dissuade, a consumer from doing any of the
3following:
SB572,11,54 (a) Truthfully responding to an insurer's request for confirmation of suitability
5information.
SB572,11,66 (b) Filing a complaint.
SB572,11,77 (c) Cooperating with the investigation of a complaint.
SB572, s. 24 8Section 24. 628.347 (4) (title) of the statutes is repealed and recreated to read:
SB572,11,99 628.347 (4) (title) Financial Industry Regulatory Authority rules.
SB572, s. 25 10Section 25. 628.347 (4) of the statutes is renumbered 628.347 (4) (a) and
11amended to read:
SB572,11,1812 628.347 (4) (a) Compliance Subject to pars. (b) and (c), sales made in
13compliance
with the National Association of Securities Dealers Conduct Rules
14FINRA requirements pertaining to suitability satisfies and supervision of annuity
15transactions satisfy
the requirements under sub. (2) for the recommendation of
16variable annuities
this section. Nothing in this subsection, however, limits the
17commissioner's ability to enforce this section, including conducting any
18investigation necessary for that enforcement
.
SB572, s. 26 19Section 26. 628.347 (4) (b) of the statutes is created to read:
SB572,11,2020 628.347 (4) (b) For par. (a) to apply, an insurer must do all of the following:
SB572,11,2221 1. Monitor the FINRA member broker-dealer using information collected in
22the normal course of an insurer's business.
SB572,11,2523 2. Provide to the FINRA member broker-dealer information and reports that
24are reasonably appropriate to assist the FINRA member broker-dealer to maintain
25its supervision system.
SB572, s. 27
1Section 27. 628.347 (4) (c) of the statutes is created to read:
SB572,12,42 628.347 (4) (c) This subsection applies to FINRA broker-dealer sales of
3variable annuities and fixed annuities if the suitability and supervision are similar
4to those applied to variable annuity sales.
SB572, s. 28 5Section 28. 628.347 (4m) of the statutes is created to read:
SB572,12,116 628.347 (4m) Insurance intermediary training. (a) An insurance
7intermediary may not solicit the sale of an annuity product unless the insurance
8intermediary has adequate knowledge of the product to recommend the annuity and
9the insurance intermediary is in compliance with the insurer's standards for product
10training. An insurance intermediary may rely on insurer-provided product-specific
11training standards and materials to comply with this paragraph.
SB572,12,1412 (b) 1. a. An insurance intermediary who engages in the sale of annuity products
13shall complete a one-time training course approved by the commissioner and
14provided by an education provider approved by the commissioner.
SB572,12,2115 b. Insurance intermediaries who hold a life insurance line of authority on the
16effective date of this subd. 1. b. .... [LRB inserts date], and who desire to sell annuities
17must complete the requirements of this paragraph within 6 months after the
18effective date of this subd. 1. b. .... [LRB inserts date]. Individuals who obtain a life
19insurance line of authority on or after the effective date of this subd. 1. b. .... [LRB
20inserts date], may not engage in the sale of annuities until they have completed the
21annuity training course required under this paragraph.
SB572,12,2322 2. The minimum length of the training required under this paragraph shall be
23sufficient to qualify for at least 4 continuing education credits, but may be longer.
SB572,12,2524 3. The training required under this paragraph shall include information on all
25of the following topics:
SB572,13,1
1a. The types of annuities and various classifications of annuities.
SB572,13,22 b. Identification of the parties to an annuity.
SB572,13,43 c. How fixed, variable, and indexed annuity contract provisions affect
4consumers.
SB572,13,55 d. The application of income taxation of qualified and non-qualified annuities.
SB572,13,66 e. The primary uses of annuities.
SB572,13,77 f. Appropriate sales practices and replacement and disclosure requirements.
SB572,13,128 4. Providers of annuity training courses intended to comply with this
9paragraph shall cover all of the topics listed under subd. 3. and may not present any
10marketing information or provide training on sales techniques or provide specific
11information about a particular insurer's products. Additional topics may be offered
12in conjunction with and in addition to those listed under subd. 3.
SB572,13,1713 5. A provider of an annuity training course intended to comply with this
14paragraph shall register as a continuing education provider in this state and comply
15with the rules and guidelines applicable to insurance intermediary continuing
16education courses as set forth in rules of the office governing intermediary
17continuing education requirements.
SB572,13,2018 6. Annuity training courses may be conducted and completed by classroom or
19self-study methods in accordance with rules of the office governing intermediary
20continuing education requirements.
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