NAIC Aims to Understand Federal Annuity Sales Standard Regulators: IRI Conference

What You Need to Know

Ten states have adopted the NAIC’s model update.
Eight states are considering adoption.
David Altmaier, the NAIC's president, said regulatory harmonization is a goal, and effectiveness of regulation is also a goal.

David Altmaier, the president of the National Association of Insurance Commissioners, said the NAIC is pushing hard to speak to federal regulators about annuity sales standards.

Altmaier discussed the NAIC’s annuity suitability model update, which requires annuity issuers and producers to work in the best interest of the customers, Wednesday, during a session at the Insured Retirement Institute’s 20 in 2021 online conference.

The U.S. Securities and Exchange Commission has adopted a related standard, Regulation Best Interest, and the U.S. Department of Labor has adopted retirement rollover rules.

“We are, very obviously, very strong supporters of the state-based insurance regulatory framework,” Altmaier said. “Any time the federal government is having conversations about insurance-related matters, we’re always very keen to engage with them and get a sense of their thought process and, and what their goals are in terms of their policy decisions. And this was no exception.

“So, we had a lot of engagement with our federal colleagues at various levels, to try to synchronize those things,” he said.

Altmaier said that the NAIC is pleased with the effectiveness of state-based insurance regulation, and that it also recognizes that having different bodies set different standards could cause complications.

“We’ll certainly look to find common grounds with our federal partners on issues of this nature, and as it continues to roll out, I’m sure there could be opportunities to recognize some efficiencies,” Altmaier said.

Annuity Suitability Model Update Adoption

“Our sense of timing has kind of been thrown off a little bit because of the pandemic,” Altmaier said. “It feels like we were literally just working on this a month or two ago. Actually, we’ve been finished with this for a little while now.”

Ten states have already adopted the NAIC’s annuity suitability model update, and eight states are considering adoption, Altmaier said.

The Florida legislative session is ending April 30. Florida state lawmakers have been too busy working on issues related to COVID-19, auto insurance and property insurance to adopt the annuity suitability model update, Altmaier said.

“This will most likely have to be at least a next-year project for us,” he said. “But, obviously, the best interest standard is critically important to us as state insurance regulators. And so, we’ll have some conversations about timing with respect to Florida pretty soon.”