Idaho and North Dakota Adopt Annuity Sales Standards Updates
Virginia's update is still in progress.
Idaho and North Dakota have become the latest states to adopt an annuity sales standard update.
The states based the updates on a model developed by the National Association of Insurance Commissioners.
The NAIC tried to make its model with the Securities and Exchange Commission’s Regulation Best Interest. The SEC model requires annuity issuers and sellers to act in the best interest of a consumer, and to disclose conflicts of interest, but it lets annuity sellers choose whether to collect fees from the customers or sales commissions from the annuity issuers.
The Idaho version will begin to take effect July 1, 2021. Experienced annuity producers will have to complete training related to the new update within six months after the effective date.
The North Dakota update will become effective Jan. 1, 2022. Like the Idaho producers, experienced annuity producers in North Dakota will have to get sales standard update training within six months after the effective date.
The American Council of Life Insurers and the National Association of Insurance and Financial Advisors put out statements welcoming the arrival of both states’ annuity sales standard updates.
The Virginia State Corporation Commission is considering a similar version of the update in Virginia.
The Insured Retirement Institute says it’s asking Virginia regulators to make their version more like the NAIC model and to give annuity producers at least six months to implement the update training standards.
The IRI believes that the NAIC intended for the six-month implementation period after an update’s effective date to be a grace period for experienced annuity producers, wrote Jason Berkowitz, IRI’s chief legal and regulatory affairs officer at IRI, writes in a letter sent to Bernard Logan, the Virginia State Corporation Commission clerk.
Experienced annuity producers should be able to use that grace period to continue to sell annuities while preparing to complete the required update training, Berkowitz says.
“We respectfully request and strongly encourage that this timeline be made clear in the final rules in order to avoid the confusion that has been encountered by regulators and industry in other states,” Berkowitz writes.