Maryland Adopts NAIC's Annuity Sales Standards
Wisconsin's governor already has a suitability bill on his desk.
The Maryland Insurance Administration has completed adoption of the annuity sales standards developed by the National Association of Insurance Commissioners.
Maryland’s insurance regulators published their version of the annuity suitability rules update Friday in an official state regulatory gazette, the Maryland Register.
The NAIC intended its update to be compatible with the Securities and Exchange Commission’s Regulation Best Interest.
The earlier suitability rule required annuity sellers to verify that an annuity sold to a consumer suited the consumer’s needs.
The update requires annuity sellers to act in the best interest of the consumer but appears to allow an agent or broker to earn commissions or other compensation tied to sales volume from selling annuities.
Maryland and New Mexico recently adopted similar suitability rule updates.
Wisconsin lawmakers have sent an update bill, Senate Bill 644, to the desk of Gov. Tony Evers.
Some other states have adopted or tried to adopt a fiduciary rule approach, which would require an annuity seller to put the consumer’s interest first and might prohibit annuity sales commissions. A fiduciary rule approach could require most annuity sellers to collect fees from the buyers, rather than commissions from the sellers.
The Hawaii Senate has passed a suitability update bill, S.B. 3079. The Hawaii House Consumer Protection and Commerce Committee is now considering that bill.
Leaders of the American Council of Life Insurers, the National Association of Insurance and Financial Advisors and the League of Life and Health Insurers of Maryland put out a joint statement welcoming Maryland’s adoption of the best interest rule and making the case that the best interest approach will help ensure that middle-class and working-class families will continue to have access to annuities.
The Maryland State Capitol in Annapolis (Photo: demerzel21/Adobe Stock)