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December 04, 2019 at 02:44 PM
A sales standard fight at the National Association of Insurance Commissioners (NAIC) could create a Regulation Best Interest rival.
Two consumer groups that oppose the latest NAIC proposal — the Center for Economic Justice and the Consumer Federation of America — say the NAIC’s current draft standard would be much weaker than the Reg BI standard.
(Related: Galvin Signs Off on Massachusetts Fiduciary Rule)
The Life Insurance and Annuities Committee, an arm of the National Association of Insurance Commissioners (NAIC), is in charge of the battle.
The NAIC is a Kansas City, Missouri-based group for state insurance regulators. It has no direct ability to change states’ financial services sales standards, but states often choose to base their insurance laws and regulations on NAIC models.
Many states are basing their current sales standards for annuities on the NAIC’s Suitability in Annuity Transactions Model Regulation.
The Annuity Suitability Working Group, part of the NAIC’s Life Insurance and Annuities Committee, has been responding to the controversy over the U.S. Labor Department’s fiduciary rule project and the U.S. Securities and Exchange Commission’s Reg BI standard by updating the NAIC’s own suitability model. The proposed NAIC update calls for annuity sellers to put consumers’ interests first and to disclose potential conflicts of interest.
The working group posted a draft Nov. 5.
Eight Industry Organizations’ View
A group of eight life and financial services organizations says in a comment letter that the draft looks great. The eight industry organizations have written to Doug Ommen, the chair of the NAIC’s Life Insurance and Annuities Committee, to ask the committee to approve the draft this month, at the NAIC’s fall national meeting in Austin, Texas.
The eight organizations believe the proposed model update “will make it possible for consumers — regardless of where they live — to be confident that insurance companies and producers with whom they are entrusting their retirement savings are acting in their best interest, and not putting their own financial interests ahead of consumers’ interests,” the organizations write.
Ommen’s committee should urge the full NAIC to adopt the proposed standard update as quickly as possible, the eight organizations write.
