Iowa became the first state in the nation to propose a new annuities best-interest rule today, with at least 12 more states expected to follow suit with some facsimile of a newly approved model released by the National Association of Insurance Commissioners (NAIC).

The regulation proposed by the Iowa Insurance Division requires annuity and securities agents to act in the best interest of their customers, “to always put the consumer’s interest first and to only make recommendations that match the particular Iowan’s needs, objectives and situations,” Iowa’s Deputy Administrator for Securities Andrew Hartnett said.

“This proposal is consistent with the efforts of the SEC and will be very beneficial to consumers,” Hartnett said.

Iowa Insurance Commissioner Doug Ommen was on the NAIC group that got the annuities model regulation over the finish line after years of false starts. “I was proud to help lead the NAIC’s effort as we worked toward a harmonized ‘best interest’ standard with the SEC for broker-dealers and agents,” Ommen said.

"I’m very pleased that we were able to propose a detailed regulatory framework that promotes informing consumers about risks, benefits and costs of any recommended transaction. I look forward to other states joining with us in this effort to protect consumers,” he added.

The American Council of Life Insurers is estimating that more than 12 other states will propose annuities best interest standards in 2020, Jack Dolan, a spokesman for the American Council of Life Insurers told Financial Advisor Magazine.

New York state, which proposed its own, tougher annuities regulation, is the only state that voted no on the NAIC annuities best-interest model. The Arizona state legislature introduced a bill to protect retirees that could become a vehicle for annuities regulation harmonization.

Eventually all states will need to harmonize their state annuities rules with the Securities and Exchange Commission’s new Regulation Best Interest standard, as Finra is doing.

“State regulators recognize people want enhanced consumer protection and that’s what the NAIC model provides—a public policy template requiring financial professionals to act in consumers’ best interest,” Dolan said.

While NAIC and industry leaders tout the increased protections of the annuities best interest model, consumer advocates such as Barbara Roper, Director of Investor Protection at the Consumer Federation of America, criticized shortcomings in the regulation, even calling the term “best-interest” deceptive.

First « 1 2 » Next