NAIC Group Continues To Debate Annuity Sales Rule

CHICAGO -- The "best interest" concept was thought to be a settled issue for a state insurance commissioners' working group struggling to create an annuity sales rule.

But it did not take long for the idea to return today at a special meeting of the Annuity Suitability Working Group. Led by Chairman Dean Cameron of Idaho, members are meeting for two days to conduct a line-by-line review of its annuity transactions model law.

The group met May 31-June 1 in Kansas City and reached a tentative agreement to pursue a "suitability plus" option as opposed to "best interest." Going with the best interest standard "would raise significant challenges when we bring the regs to our legislature," Michael Humphreys of Tennessee said then.

But some states, such as New York and Ohio, quickly resumed their push today for a tougher standard that "the only consideration can be the consumer's best interest."

That led to an extended disagreement between the conservative and liberal factions of the group.

"I don't think that is an unreasonable request when you look at some of the conflicts we have seen," said James Regalbuto, New York deputy superintendent for life insurance. "It is a very precise way to inform not only consumers, but producers on what is expected of them."

Iowa Insurance Commissioner Doug Ommen strongly disagreed, noting that "best interest" is a tricky concept when comparing the products of an insurance agent and the products of a securities' licensed advisor.

"When I look at the market that we regulate, I just don't see that 'best interest' is going to be the answer," Ommen said.

The working group meeting continues into the evening and the group will re-convene at 8 a.m. Tuesday. Members hope to reach tentative agreement on an annuity sales rule it can take to its parent committee during the NAIC Fall Meeting Nov. 15 in San Francisco.

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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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.