If state insurance regulators wrestle control over annuity sales standards away from the U.S. Department of Labor, some states could end up making the DOL look like a gentle little kitten.
Miami-based legal analysts at Carlton Fields Jorden Burt P.A., a law firm, raise that possibility in a look at new draft regulations released in December by the New York State Department of Financial Services.
The DOL has decided to delay the implementation of its own DOL fiduciary rule best interest standard guidelines by at least 18 months.
New York state regulators have responded by proposing a new version of the state’s Suitability in Annuity Transactions regulation. A new, broader Suitability in Life Insurance and Annuity Transactions regulation could include a best interest standard and best interest definition. The best interest standard would require an insurance agent to act in the best interest of the customer when recommending a life insurance product or annuity.
Other states have also been working on adding a best interest standard to their own annuity suitability standards.
Carlton Fields has posted its commentary on the draft regulations here.
Here are three Carlton Fields observations about the draft regulations, drawn from the commentary.
1. The fact that the draft regulations include life insurance is a big deal.
The Carlton Fields analysts call the proposed broadened scope of the regulation the “biggest noisemaker” in the draft.
In addition to applying to the sale of an annuity contract, the proposed draft could apply to an agent’s discussions with a client about whether the client should increase the face amount of a life policy, change a premium payment schedule, or elect to receive accelerated death benefits.