Judith French will continue to be one of the most important shapers of how U.S. annuity sales and distribution rules work going forward.
The National Association of Insurance Commissioners has announced that French will return as the chair of its Life Insurance and Annuities Committee.
For now, the committee has just one concrete item on its official to-do list: "Consider how to promote greater uniformity in the adoption of the Suitability in Annuity Transactions Model Regulation across NAIC member jurisdictions."
That means just how much continuing education an annuity seller needs, what the continuing education course will cover and what happens when an annuity owner files a complaint could get more attention than usual from the NAIC.
French will also be in charge of one of the NAIC committees that affects how life and annuity insurers design products, price products and make sure they have the financial resources to pay life insurance claims and send cash to annuity holders.
Doug Ommen, the Iowa insurance commissioner, and Carter Lawrence, Tennessee's insurance commissioner, are co-vice chairs of the committee,
Why it matters: Now that Washington is backing away from the idea of trying to oversee annuity advisors who are not already under the jurisdiction of the U.S. Securities and Exchange Commission, French will be the de facto leader of the annuity market rulemaking machinery.
This means that her views and priorities will affect the lives of anyone owns an annuity or helps a client buy or use an annuity.
The NAIC: U.S. federal law leaves regulation of the business of insurance to the states. The NAIC is a Kansas City, Missouri-based group that helps state insurance regulators share ideas and, in some cases, coordinate their activities.
The NAIC affects state annuity regulation efforts by developing model laws, model regulations and models for "subregulatory guidance," such as letters and notices.
States can choose whether or not to adopt the NAIC models and how to enforce the laws or regulations they have adopted.
Forty-eight states have adopted the NAIC's annuity suitability model update, and New Jersey has adoption pending, according to a map posted by the NAIC Life Insurance and Annuities Committee Annuity Suitability Working Group.
New York has adopted a separate, stricter regulation that sets a fiduciary standard for annuity sellers and advisors in that state.
The annuity sales standards backdrop: Former President Joe Biden had been trying to use the U.S. Labor Department's ability to enforce a fiduciary standard of care on retirement plan fiduciaries under the Employee Retirement Income Security Act of 1974 to impose a fiduciary standard of care on people who help retirement savers roll retirement account assets into annuities or other insurance arrangements.
A U.S. District Court judge in Texas put the Labor Department effort on pause in September.
Now, President Donald Trump appears to be unlikely to make any effort to revive the Labor Department's annuity regulation project.
The SEC has, separately, developed Regulation Best Interest. The NAIC said when it was developing its annuity suitability model update that it intended for the suitability update to wrap around Reg BI.
A fiduciary standard requires an individual or companies subject to the standard to put the client's interests first. A fiduciary is supposed to recommend the best solution for a client's needs.
In practice, a fiduciary standard may make commission-based sales compensation arrangements difficult or impossible, and it may subject advisors to lawsuits if clients look back and find that some investment strategies worked better than the strategies that their advisors recommended.
A suitability standard requires an annuity seller or advisor to review a client's finances and determine whether a proposed annuity transaction suits the client's needs.
A best-interest standard requires an annuity seller or advisor to put the client's interests first, evaluate the suitability of a proposed annuity transaction, review a wide range of products, and justify any annuity purchase recommendations provided.
Judith French: Ohio Gov. Mike DeWine, a Republican, appointed French to be director of the Ohio Department of Insurance in 2021.
She is a lawyer who served for eight years on the Ohio Supreme Court Court and for eight years as an appeals court judge. She also has served as a chief legal counsel to the Ohio governor.
She has a bachelor's degree, a master's degree in history and a law degree from Ohio State.
At the Ohio department, she has highlighted operation of an emerging products and innovation initiative.
At the NAIC, Weber has been the head of the Life Insurance and Annuities Committee since 2022.
Her aide, Pete Weber, has spearheaded efforts to require life insurers to report more detailed information about guaranteed annuity benefits, such as guaranteed minimum death benefits and variable annuity guaranteed living benefits that are available during annuity's asset accumulation phase or the cash withdrawal phase.
Weber has also worked on efforts to develop a Generator of Economic Scenarios that life and annuity issuers can use to determine how they might perform during a financial crisis or in economic conditions that are much different from current conditions.
Judith French. Credit: Ohio Department of Insurance
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