NAIC Group Backs Off From Sharp Best Interest Standard

KANSAS CITY -- The National Association of Insurance Commissioners' working group sided with Iowa this afternoon and moved closer to blessing an annuity transactions model law.

Just don't call it a "best interest" rule.

After an all-day session filled with public comments and debates over language, disclosures and working group goals, members took straw poll votes on a series of key language sections. Iowa submitted language that avoided calling the rule a "best interest" standard, and members opted for that verbiage.

The late-day straw polling began with members agreeing 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," said Michael Humphreys of Tennessee.

And that was the theme of the day -- uniting the disparate New York liberal and Iowa conservative factions into a model law that will win support across the spectrum.

"Our end goal is to have a product that can pass, not only this group, but the (NAIC) A Committee, plenary and ultimately the states," said Idaho Insurance Commissioner Dean Cameron, chair of the Annuity Suitability Working Group.

Part of the strategy involved convincing progressive members that the words "best interest" don't have to be included to accomplish the same goals.

Jodi Lerner, attorney for the California Insurance Department, was convinced. "I'm kind of buying in to the idea of adopting best interest, but not calling it 'best interest,'" she said before voting for Iowa language.

The group will pick up early Friday morning with more straw poll voting.

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].

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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.