A bill seeking to amend how annuity sales are regulated was recently vetoed by Governor Mark Dayton (D-Minn.), who said it would not offer enough protections to senior consumers, including reverse mortgage borrowers.
While the cross-sale of reverse mortgages and other financial products has been banned to protect seniors from purchasing a policy that’s not in their best interests, the Minnesota governor action further seeks to ensure that protection.
The bill, HF 1134, wanted to amend legislation to modify an insurance agent or company’s responsibilities to the consumer when selling an annuity, and despite meeting with both House and Senate approval, it was vetoed on April 30.
The prohibition of cross-selling is a good protection, says Beth Paterson, executive vice president of Reverse Mortgage SIDAC, the Minnesota division of Greenleaf Financial, LLC.
“If there is one person selling both the insurance product and the reverse mortgage, it could be perceived that the person is encouraging the reverse mortgage to also make money off the insurance product,” said Paterson.
The amendment to annuity sales would not fall in line with the state’s current suitability policy, Dayton said to Minnesota’s Speaker of the House Kurt Zellers in a letter explaining the veto.
“This bill does not provide the necessary protections for senior citizens and accountability for insurance companies in the sale of long-term deferred annuities with substantial surrender penalties,” Dayton wrote.
The governor said he would not sign the bill into action until it holds insurance companies and agents responsible for the suitability of long-term deferred annuities to senior citizens.
The governor’s office did not respond to a request for comment as of press time.
Written by Erin Hegarty