State insurance regulators finally have hammered out their “best interest” model regulation for annuities, and now NAIFA and other industry players are pushing states around the country, both liberal and conservative, to pass the new standard. The goal, according to Diane Boyle, NAIFA’s Senior Vice President for Government Relations, is to quickly establish a consistent approach throughout the U.S., “and then that does sort of negate the need to the states to look for other options,” she explains.
The new “best interest” standard results from amendments to the National Association of Insurance Commissioners (NAIC) annuity suitability model regulation. The amendments add four obligations: care, disclosure, conflict of interest, and documentation, but do not create a fiduciary duty. Under the updated regulation, agents need to uncover and document information such as a consumer’s financial status and objectives and insurance requirements.
The good news for NAIFA and other advocates of the NAIC “best interest” approach is that only New York–which touts its controversial Regulation 187–voted against the “best interest” amendments. Even the California insurance commissioner, despite some misgivings, supported the revised model regulation.
States approve NAIC model regulations in various ways. Some require legislative approval, while others can be implemented by the state insurance department.
More details are available HERE.