Top representatives of the life insurance and retirement industries talked Wednesday, during a panel discussion in Washington, about the possibility that states could create a patchwork quilt of annuity sales standards.
The American Council of Life Insurers is actively engaged with the Securities and Exchange Commission and the National Association of Insurance Commissioners on the conflicts of interest and the best interest of the consumer rulemakings, according to Susan Neely, the ACLI’s president.
The SEC began work on its advice-standards package, which includes the proposed Regulation Best Interest, after a court vacated the U.S. Department of Labor’s fiduciary rule.
Neely said here are some states, such as Maryland, that are trying to set their own sales standards before the SEC completes work on its project.
“Fiduciary is not over,” Neely said. “There are people who want to advance it.”
The Maryland bill has about eight different protections in it, Neely said.
“Other states are waiting in the wings to see what happens,” she said.
“If five big states adopt an approach, you are ultimately going have to embrace that approach,” Neely said. She said that outcome could create a much more complicated playing field that could hamper access to retirement security products.
Neely said state efforts could produce unintended effects. She said a former agent told her that, if his customer was a person who worked at a car dealership, under the Labor Department’s fiduciary standard, he would not be able to get advice. The owner of the car dealership would, though, the agent told her.
Another member of the panel — Wayne Chopus, president of the Insured Retirement Institute — said the IRI will be in Annapolis next week to testify about the Maryland legislation.
The IRI has also submitted written testimony on the fiduciary standard effort in Nevada, Chopus said.
Chopus said that there are good intentions at the state level, but that some of the approaches could lead to unintended consequences for the consumer.
Chopus said in separate comments to ThinkAdvisor that he worries about a “patchwork quilt” effect. He mentioned efforts in New Jersey, and an existing law in New York state, as well as the Maryland and Nevada efforts.
The effect of a change in Nevada might not seem great, but a law there would apply to agents and brokers who do business in that state as well as to others, so it could have a larger impact, Chopus said.
The life and retirement panel was part of the 15th annual Networks Financial Institute conference.
Eric Cioppa, the superintendent of insurance in Maine and the president of the National Association of Insurance Commissioners, said during another panel discussion at the conference that the NAIC hopes for harmony with the SEC with its own efforts on suitability. He said, though, that states will do what they wish, and that some have different views.
Some states want a broad fiduciary standard and some think that a best-interest standard “is a step too far,” Cioppa said.
— Read Please Harmonize With SEC Reg BI: Insurance Groups to NAIC,, on ThinkAdvisor.