IRI Closely Watching For Fiduciary Developments
The State Of Rules
Industry lobbyists are generally unsatisfied with the rule, and Berkowitz explained why. For starters, the exemption "is not particularly workable in the context of independent producers, because it requires a fiduciary financial institution," he said.
"For independent producers, there's typically not a financial institution that is eligible and willing to serve in that function. Insurance companies are not generally going to be comfortable supervising producers who can recommend products offered by other companies, and these independent producers are typically not affiliated with broker dealers, or banks."
If the industry didn't like the Trump rulemaking they surely won't like what the Biden Department of Labor is crafting. The agency signaled through its agenda that it intends to publish a new definition of "fiduciary."
IRI is "ready and waiting to engage," Berkowitz said, while keeping in mind the federal appeals court decision that overturned a 2016 fiduciary standard put forth by President Obama's DOL.
"We want to make sure that as the definition of fiduciary may continue to evolve, that it does so in a manner that is consistent and compatible with the Fifth Circuit ruling in case that overturned the 2016 rule," Berkowitz said.
States In Play
At the state level, IRI is laser-focused on getting the National Association of Insurance Commissioners' annuity rules model update approved in as many states as possible, Berkowitz said.
Wisconsin recently became the 23rd state to adopt the NAIC model, which articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. With the outbreak of COVID-19, states were slow to adopt the model in the months that followed. Activity began to pick up in late 2021 and has continued in 2022.
"I continue to believe that we will likely see the vast majority of states have that in place by the end of next year, if not sooner," Berkowitz said. "There's always a couple of stragglers when it comes to NAIC models, but we're working very diligently with a number of industry groups that are singularly minded to work with the states that haven't picked it up already."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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