Iowa looks more and more like a major geographic center for the U.S. annuity industry, and Doug Ommen, Iowa’s insurance commissioner, looks as if he’s one of the top annuity regulators.
American Equity Investment Life, Fidelity & Guaranty Life, FBL Financial Group, Principal and Transamerica all have headquarters offices or other major offices there, and Ommen led the National Association of Insurance Commissioners’ efforts to shape the NAIC’s new annuity suitability standards model update.
Now, the Iowa Insurance Division is reviewing comments on a proposed best interest standard that’s based on the NAIC model, and on the thinking behind the U.S. Securities and Exchange Commission’s Regulation Best Interest regulations.
- Links to comments on the Iowa best interest proposal is available here.
- An article about the introduction of the proposal is available here.
The Iowa division recently posted a collection of public comments on the proposal on its website.
Here’s a look at nine of the points and ideas surfacing in the comments.
1. Financial services groups generally like Ommen, and the proposal.
Jim Poolman, executive director of the Indexed Annuity Leadership Council, wrote to praise Iowa for embodying the spirit of the NAIC’s model update.
“We remain hopeful that other states will follow Iowa’s lead in adopting this standard in a uniform fashion to create important regulatory uniformity — particularly for those insurance and financial professionals working across state lines as well as for our members,which are regulated by all fifty states,” Poolman writes in the IALC comment.
2. Many financial services commenters are wary of any language that might conflict even slightly with the SEC’s Reg BI language.
“Reg BI provides both strong consumer protections and continued access to securities such as variable annuities,” Roberta Meyer and Vincent Ryan write, on behalf of the American Council of Life Insurers (ACLI).
The ACLI’s concern “is that adoption of the Iowa securities regulations with the inconsistencies as a whole could initiate a patchwork of 50 different state securities rules that are inconsistent or conflict from state to state and that duplicate and are inconsistent or conflict with Reg BI,” the ACLI reps write. “This could undercut the ultimate goals of a harmonized best interest standard of care for annuities and securities across regulatory platforms and level consumer protection across the country.”
In the NAIC model and Reg Bi, for example, the text prohibits placing the insurer’s or financial professional’s financial interest ahead of the consumer’s interests, while the Iowa proposal requires the insurer and financial professional to put the consumer’s interest first.
Iowa proposal drafters might have thought their version sounded better and was easier to understand.
But, from the perspective of the ACLI reps, even that change could lead to confusion.
3. Industry commenters want more time to deal with the proposal.
Anne Tennant, general counsel at Morgan Stanley Smith Barney LLC, says Iowa should wait until after the COVID-19 crisis is over to continue working on the best interest standard.