The Iowa Insurance Division unveiled a best-interest proposal Thursday to require annuity agents and securities agents to act in the best interest of their customers.
The regulation is meant to require annuity sellers to put the consumer’s interests first.
Iowa's regulation follows a vote two weeks ago by the National Association of Insurance Commissioners (NAIC) to amend its model Suitability in Annuity Transactions Model Regulation. NAIC regulators adopted a best-interest standard that is harmonized with rulemaking by the U.S. Securities and Exchange Commission (SEC).
Iowa Insurance Commissioner Doug Ommen, who is also the state's securities regulator, was a driving force behind the NAIC best-interest effort. Iowa is one of the first states to put forth annuity rules that harmonize with the NAIC model.
When the NAIC working group tasked with upgrading the annuity model floundered last year, Ommen produced the language articulating a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation.
Ommen released the following statement Thursday:
“I was proud to help lead the NAIC’s effort as we worked toward a harmonized ‘best interest’ standard with the SEC for broker-dealers and agents that makes sure the consumer’s interests are put first.
“Our experience in Iowa has proven that varied advisory models offer incredibly valuable consumer access to retirement education and security. Iowans choose professional financial services either through fee arrangements or through transactional commission arrangements based on their particular needs.
"Requiring high quality financial advice that fits the particular needs, objectives and situation of the individual Iowan has always been our primary purpose. This model regulation will preserve consumer choice so that many more middle class Iowans will retain access to retirement education and security that they choose.
“I’m very pleased that we were able to propose a detailed regulatory framework that promotes informing consumers about risks, benefits and costs of any recommended transaction. I look forward to other states joining with us in this effort to protect consumers.”
Deputy Administrator for Securities Andrew Hartnett added the following comments.
“This standard requires the financial professional to always put the consumer’s interest first and to only make recommendations that match the particular Iowan’s needs, objectives and situation. This proposal is consistent with the efforts of the SEC and will be very beneficial to consumers.”
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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