Arizona Gov. Doug Ducey last week signed state Senate Bill 1557, a bill that sets a “best interest” interest for the sale of annuities in Arizona.
The new standard, which is set to take effect Jan. 1, 2021, is based on the same National Association of Insurance Commissioners model law that Iowa has used as the basis for its new annuity sales standard law.
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The new law requires an agent or broker who sells an annuity to “act in the interest of the consumer under the circumstances known at the time of recommendation is made and without placing the producer’s financial interest ahead of the consumers,” according to the official state legislature bill summary.
The new law also requires a producer to satisfy “obligations regarding care, disclosure, conflict of interest and documentation”; to “know the consumer’s financial situation, insurance needs and financial objectives”; and to “understand the available recommended options.”
A producer who sells an annuity must try to verify that “the recommended option effectively addresses the consumer’s situation over the life of the product,” and that “the consumer would benefit from features of an annuity, such as annuitization, death or living benefits or other insurance-related features.”
The producer must “make a reasonable effort to obtain consumer profile information from the consumer before recommending an annuity.”
The NAIC model drafters said they were trying to make their model compatible with the U.S. Securities and Exchange Commission’s Regulation Best Interest.
The SEC developed its Reg BI regulation after the administration of President Donald Trump let the U.S. Department of Labor’s original fiduciary rule proposal die in court.