NAIC Punts Fiduciary Standard, Invites More Comments

A National Association of Insurance Commissioners working group voted Saturday to open up another 30-day comment period on its controversial annuity sales standard.

The new comment period will end Friday, April 27. Comments can be sent by email only to Jolie H. Matthews, senior health and life policy counsel, at [email protected].

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 that was struck down by the courts last week, while others say it doesn't go far enough.

Many of those critics from both sides are state representatives sitting on the NAIC Annuity Suitability Working Group.

The group finalized its "Annuity Transactions Model" last year and its comment period closed Jan. 20. But a March 14 conference call to begin finalizing rule language quickly bogged down, with only minor agreements reached.

Hopes for a Final Rule

Group Chairman Dean L. Cameron, Idaho insurance commissioner, expressed hope that a final model law would be finished and voted on at the NAIC spring meeting Saturday in Milwaukee.

But the group was unable to get an agreement, opting for another comment period instead.

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.

Working group leadership downplayed the draft law during its March 14 call, adding that it was only meant to get the ball rolling. NAIC model laws must then be adopted by a state before they are applicable.

Several states, including New York, Nevada, New Jersey and Connecticut, bypassed the NAIC and moved to produce their own best-interest standards. Those rules are in various stages of development.

James Regalbuto of New York said he favored adhering to the DOL fiduciary rule definition "where possible." The DOL rule's impartial conduct standards went into effect June 9 and should be "a guide" for the NAIC standard, he added during the March 14 call.

Those standards require annuity sellers into retirement accounts to act as a fiduciary, make no misleading statements and accept only "reasonable" compensation.

Regalbuto did not return a phone call seeking comment.

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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