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North Dakota Lawmakers Working on Annuity Best Interest Bill

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North Dakota is one of the states moving toward adopting the National Association of Insurance Commissioners’ annuity sales standards model update.

The update includes a “best interest” standard that’s meant to be compatible with the U.S. Securities and Exchange Commission’s Regulation Best Interest. The provision requires annuity sellers to act in consumers’ best interest.

Iowa, Arizona, Arkansas, Michigan and Rhode Island have already adopted the NAIC model update, according to the American Council of Life Insurers (ACLI).

Members of the North Dakota House Industry, Business and Labor Committee voted 13-0 Tuesday to approve House Bill 1160, which would add the NAIC best interest standard language to North Dakota’s insurance laws.


Committee members reviewed House Bill 1160 at an in-person meeting in Bismarck that was streamed live on the web.

Only about two of the 13 state officials visible in the video were wearing masks. Most of the witnesses who talked to the committee members about the bill testified through a web conferencing system or wore masks.

Jon Godfread, the North Dakota insurance commissioner — who may be the world’s tallest elected official — testified in support of the bill.

The other witnesses who talked about House Bill 1160 all spoke on behalf of insurance companies or groups, such as the ACLI, the Insured Retirement Institute, the Independent Insurance Agents and Brokers of America (IIABA), and State Farm. No individual consumers or representatives from consumer groups testified.

Wesley Bissett, a representative for IIABA, asked lawmakers to adopt an IIABA amendment that would eliminate the term “best interest” from the text. Bissett said the term is too vague and could eventually lead to lawsuits against agents.

“Agents don’t oppose tough oversight,” Bissett said. “We simply want to know what the rules of the road are.”

Most of the House Bill 1160 requirements are clear, but the obligations created by the best interest standard are not, Bissett said.

J. Bruce Ferguson, a senior vice president with the ACLI, which strongly supports House Bill 1160, said that the first page of the bill text states that the bill may not be construed to create any new right for consumers or other parties to file lawsuits.

“That was language added at the request of the independent agents, and I think it addresses the concerns that Mr. Bissett raised,” Ferguson said.

Pat Ward, a representative for State Farm, asked the committee to pass a bill based solely on the language in the NAIC model, with no changes.

North Dakota legislation drafting specialists changed the word “shall” to “must” in one place in the bill text.

Ward asked lawmakers to change the word back to “shall,” to avoid any possibility that the federal government would impose its standards in response to lack of uniformity in state annuity sales standards laws .

The North Dakota House committee ended up approving a version of the bill that still uses the word “must,” rather than “shall.”

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