The Arizona House of Representatives this week approved and sent to Gov. Doug Ducey a bill to adopt a model regulation for annuity sales that requires financial professionals to act in the best interests of the consumer.
If Ducey signs the bill, Arizona would become the second state to adopt best-interest rules modeled on a proposal the National Association of Insurance Commissioners sent to the states earlier this year. Iowa adopted similar rules in early May.
The Arizona House voted 36-24 to approve the measure, sponsored by Sen. David Livingston, R-22nd District. The Arizona Senate unanimously approved the measure in February.
Livingston has a bachelor's degree in finance from Arizona State University and was a financial advisor and franchise owner of Ameriprise Financial in Peoria, Ariz. from 1992 to 2012. He is a Lifetime Member of the Million Dollar Round Table.
Insurance executives are generally happy with the best-interest rules, which impose obligations of care, disclosure, conflict of interest and documentation on producers selling products in the state.
“This is another victory for consumer protection and choice,” said Jason Berkowitz, IRI chief legal and regulatory affairs officer for the Insured Retirement Institute. “The bill requires insurance producers to act in the best interest of their clients when making annuity recommendations.”
The NAIC model regulation closely aligns with the U.S. Securities and Exchange Commission’s Regulation Best Interest (Reg BI), which takes effect on June 30. The alignment of federal and state regulation mitigates against conflicting rules for financial professionals who provide important advice and products to consumers.
Arizona’s new regulation, like the NAIC model and Reg BI, preserves consumers’ choice of the financial professional and products that best meets their needs, IRI said in a news release.
Included in the Arizona legislation is language to provide a safe harbor for all insurance producers who are subject to, and comply with, equivalent or greater standards such as Regulation Best Interest or the Investment Advisers Act.
This will avoid duplicative compliance requirements for those who already comply with rigorous standards, the IRI release said. The trade group worked to include this language in the NAIC model regulation.
“We strongly urge Gov. Ducey to sign this important legislation,” Berkowitz said. “IRI will continue to urge the rest of the states to adopt the NAIC model regulation to provide strong consumer protection for annuity purchasers across the nation,” Berkowitz said.
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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