The best way the insurance industry can affect change on the Department of Labor fiduciary rule is by providing current data to regulators, a top department official said today.
Timothy Hauser, deputy assistant secretary for program operations, is considered the man behind the fiduciary rule. But that was during the Obama administration -- the rule was published in April 2016.
Speaking on a call with the National Association of Insurance Commissioners, Hauser made it clear he works for President Donald J. Trump now. In a Feb. 3 memorandum, Trump ordered the DOL to further study the economic and legal ramifications of the rule.
In the meantime, phase one of the rule took effect June 9. The DOL recently published a Request For Information in a process that many think will lead to a delay of phase two, scheduled to take effect Jan. 1, 2018.
'Much Harder to Get the Same Data'
The DOL was criticized heavily for its lack of recent and reliable data on insurance industry impacts. Much of its original economic analysis relied on mutual fund sales data.
Hauser pointed out as much to NAIC commissioners.
“We would welcome additional and better data if people have it that’s very, very specific to the insurance industry,” Hauser said. “The best data that’s available is in the mutual fund space. It’s much harder to get the same data from the insurance world.”
NAIC commissioners and Hauser agreed to work together on the fiduciary standard. To date, there's been little interaction between NAIC and the DOL on the issue.
But NAIC recently formed a working group to examine the possibility of state regulators using key principles of the DOL fiduciary rule for annuity sales.
The states could lead efforts to establish “uniformity and consistency” for the sale of annuities, said Wisconsin Insurance Commissioner Ted Nickel, speaking at the Insured Retirement Institute conference in Washington last month.
The NAIC working group will study the language, among other aspects, of the DOL fiduciary rule standard, Nickel said.
Portions of the fiduciary rule went into effect June 9, requiring agents and advisors to act as fiduciaries, make no misleading statements, and accept only "reasonable" compensation. Known as the Impartial Conduct Standards, these are the "core" principles of the fiduciary effort, Hauser said.
The Jan. 1 phase two requirements have to do with the exemptions, including hefty disclosures and a signed contract as part of the Best Interest Contract Exemption (BICE).
All on the Table
At one point, Hauser was pointedly asked why fixed indexed annuities were added to the BICE, a late DOL decision that rankled most players within the insurance industry.
After a now-stock answer about the "complexities" associated with FIAs, Hauser suggested everything is on the table as far as the final determination on the products.
"That’s certainly one of those issues we will be looking at – should there be a separate exemption for fixed indexed annuities?" he asked. "Should they be put back into 84-24? ... We’re interested in whatever feedback we get on what to do."
The deadline for comments on the RFI is Aug. 7, although Hauser called that "a soft deadline," with the department accepting comments afterwards. The DOL is not planning to push hard on the industry as long as the effort is being made to comply, Hauser said.
"We’re asking for pretty significant changes in this marketplace under this rule," he said. "It’s going to take time for people to figure out exactly. There’s going to be bumps along the way."
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].