Several more states are moving quickly to add a best-interest annuity sales standard to its regulation of insurance products.
The latest states to pursue the best-interest model law put forth by the National Association of Insurance Commissioners are Michigan, Arkansas, Maine and Nebraska.
In February 2020, the NAIC adopted a model law that 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.
States handle regulations such as this in two ways: either via rules published by state regulators, or as legislation. Here is the latest news from the four states to recently pass rules:
- Arkansas. Insurance Commissioner Alan McClain issued a Dec. 28 bulletin about the new rules, which hew closely to the NAIC model. Producers will have six months from the effective date to begin complying with the new rules.
- Michigan. The state legislature adopted a best-interest update that was signed into law by Gov. Gretchen Whitmer on Dec. 29.
- Maine. The Maine Department of Insurance held a public hearing Dec. 10 on its update. The Maine update is very close to the NAIC, but it does require consumer signature on each page of a disclosure document. The state has received comments requesting a change to that requirement.
- Nebraska. Another state that requires legislation, a bill to update Nebraska's annuity sales rules was introduced last week by Sen. Matt Williams, and referred to the Banking, Commerce and Insurance Committee today.
The NAIC model rule specifically does not establish a fiduciary duty, nor does it ban agents from recommending products with a higher compensation structure. Consumer advocates say the rule has no teeth and falls well short of true consumer protection.
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.
© Entire contents copyright 2021 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.