NAIC Officials Hope To Hammer Out Best Interest Standard

A National Association of Insurance Commissioners working group will meet in Kansas City Thursday and Friday to see if it can hammer out an annuity transactions model law.

The NAIC is attempting to adopt a model law that states can then put in place, creating a uniform standard. Some industry critics say it too closely mimics the Department of Labor fiduciary rule, while others say it doesn't go far enough.

The working group tried a conference call, then met in person March 24 at the NAIC Spring Meeting, but made little progress.

Working group members from conservative states such as Iowa, who say the current suitability regs are working fine, and more liberal states such as New York and at odds over the model law.

New York is moving forward with its own best-interest regulations, which officials say will be in place by the end of the year. The New York standard would cover both annuities and life insurance.

Similar to the DOL rule, the NAIC model would place limits on agent compensation, require more disclosures and set a “best interest” standard. The standard would apply to annuity sales only.

The NAIC continues to receive comments on its best-interest proposals.

"Including life insurance in the Model Regulation is unnecessary because life insurance sales practices are already subject to comprehensive state laws and regulations, which assure that life insurance products are sold consistent with the best interest of consumers," said J. Bruce Ferguson, senior vice president of state relations for the American Council of Life Insurers, in a letter received this week.

The working group, led by Commissioner Dean Cameron of Idaho, will meet all day Thursday and again Friday morning in the hopes of finalizing a proposal. The full NAIC membership would then have to vote on the rule.

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.