Posted on December 6, 2019

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) encouraged state insurance regulators to advance a revised annuity transactions model regulation during a meeting of the National Association of Insurance Commissioners (NAIC) this weekend in Austin, Texas.

Over the past two years, the NAIC has been exploring enhancements to its model regulation, which sets the rules insurance producers must follow when recommending annuity products to their clients. The U.S. Securities and Exchange Commission took similar steps earlier this year when it adopted Regulation Best Interest to raise the bar for federally regulated broker-dealers and their registered representatives.

“The NAIC has produced a solid, workable proposal to revise its Suitability in Annuity Transactions Model Regulation that advances consumer protections with a best interest standard for insurance producers,” said Jason Berkowitz, IRI Chief Legal and Regulatory Affairs Officer. “We believe the time is right for this proposal to be approved at the NAIC committee level and advanced up to leadership and the full NAIC membership for final approval so individual states can begin taking steps to adopt this new model regulation in early 2020.”

Berkowitz noted that the NAIC effort to enhance the current model in a manner that is generally consistent with Regulation Best Interest is the right approach to provide strong consumer protection.

The NAIC language also includes IRI-recommended language to provide a safe harbor for all insurance producers who are subject to, and actually comply with, equivalent or greater standards such as Regulation Best Interest or the Investment Advisers Act. This will avoid duplicative compliance requirements for those who already comply with rigorous standards.

“The NAIC engaged all stakeholders in a rigorous, transparent process to produce this significant advancement of consumer protection regulation,” Berkowitz said. “IRI appreciates the leadership and efforts by the members  of the NAIC’s Annuity Suitability Working Group throughout this process. In particular, we are grateful for the thoughtful and diligent leadership of Ohio Insurance Director Jillian Froment, the Annuity Suitability Working Group chair in 2019, Iowa Insurance Commissioner Doug Ommen, the Working Group vice chair and chair of the NAIC’s Life Insurance and Annuities (A) Committee, and Idaho Insurance Director Dean Cameron, who led the initial work on this effort as the Working Group chair in 2018.”

# # #