Social Security battle lines lead the way among 2022 top regulation stories

The future of Social Security attracted substantial attention as 2022 wound down and Beltway lawmakers parried controversial ideas for the future of the popular program.

Republicans got debate started after taking control of the House of Representatives following the November general election. Some GOP members used the win to suggest they use the federal debt ceiling as a tool to pry some reforms from Democrats as the debt rises to the $3.4 trillion limit in mid-2023.

The party's stated goal was to save Social Security with reforms that would preserve and return it to its antipoverty roots, along with helping reduce federal spending. But with Social Security set to run short of funds in 2035, many are skeptical about any plans to slow the growth of the program.

Our December story, GOP proposals would create flat Social Security benefit, up retirement age, ended up by far the most overall visited story of the year on InsuranceNewsNet.

Here are the rest of the top 10 most visited stories for 2022:

Health agents: reverse CMS rule

Efforts by the Centers for Medicare & Medicaid Services aimed at fighting misleading Medicare Advantage claims did not sit well with a health insurance agents’ association.

Members of Health Agents for America took the fight to CMS with a petition on Change.org, asking the agency to reverse its requirements that licensed and certified independent agents record phone calls that result in enrolling a client into a Medicare Advantage or Medicare Part D prescription drug plan. Despite the efforts the new call recording regulations took effect Oct. 1.

CMS is trying to combat misleading TV commercials and print ads. Often, some celebrity or former athlete is pitching a particular Medicare Advantage plan.

But the requirement put an additional burden on agents who are helping Medicare beneficiaries choose a suitable plan for their needs, according to a group calling itself Agents and Brokers Against CMS Call Recording, which started the petition.

Regulators take aim at IUL illustrations

The Indexed Universal Life Illustration Subgroup restarted discussions in July to consider tightening Actuarial Guideline 49A to rein in life insurance illustrations.

Adopted in 2015, AG 49 failed to bring IUL illustrations in line, so the National Association of Insurance Commissioners adopted the subgroup's recommendations for AG 49A late in 2020.

Critics claimed AG 49A didn't go far enough, and regulators promised to keep a close eye on illustrations. When outsized illustrations quickly returned, regulators began meeting again and subgroup chair Fred Andersen of the Minnesota Department of Commerce presented several options.

Regulators grapple with data privacy

This June story dove into efforts by regulators to rein in data use and restore data privacy.

California passed the first data privacy law, which contains the broadest consumer protections. The state passed two separate laws: the California Consumer Privacy Act, which took effect on Jan. 1, 2020, and the California Privacy Rights Act, passed in November 2020 and taking effect on Jan. 1, 2023.

The former bill gives Californians the right to access personal information companies collect on them and prevent it from being sold. The latter law extends those rights to allow consumers to request the deletion of their personal data.

One of the biggest changes in the CPRA is the creation of the California Privacy Protection Agency. This agency will have the full administrative power, authority, and jurisdiction to implement and enforce the CCPA and CPRA, and can impose fines of $2,500 for each violation of the CPRA or $7,500 for each intentional violation or each violation involving a minor.

RILA Act passes House panel

The Registered Index-Linked Annuity Act gained a key approval from the House Committee on Financial Services in this July story.

The bill, which would later pass the Senate, lowers barriers to retirement income products by requiring the Securities and Exchange Commission (SEC) to revise rules regarding developing and offering certain annuity products, including RILAs.

RILAs  promise growth beyond a simple fixed rate of return while providing guaranteed protection from losses in market downturns. They are a hybrid of popular fixed indexed annuities that tie performance to major market indexes.

In 2022, LIMRA projects RILA sales to be between $38 and $42 billion.

DOL moving closer to full fiduciary rule?

About the only thing left for the Department of Labor to do with its fiduciary definition rewrite is to essentially make all first-time advice fiduciary, analysts agreed during this August webinar.

If it happens, that change would be significant and basically return the DOL to its initial 2016 fiduciary rule, said Brad Campbell, partner at Faegre Drinker law firm. As it stands, the DOL's package known as the investment advice rule makes rollover advice fiduciary.

The investment advice rule has two main parts: a new prohibited transaction exemption allowing advisors to provide conflicted advice for commissions; and a reinstatement of the "five-part test" from 1975 to determine what constitutes investment advice.

With the Biden administration back in place at the DOL, work quickly began to do more tinkering with the regulation of financial product sales. The DOL’s spring 2021 Regulatory Agenda confirmed that it will rewrite the definition of fiduciary.

The rule has yet to be released.

Biden independent contractor rule

The Department of Labor unveiled a proposal in October that would make it harder for companies to treat workers as independent contractors, potentially upending several industries, including financial services.

The new proposal would require that workers be considered a company's employees, who are entitled to more benefits and legal protections than contractors, when they are "economically dependent" on the company, the International Business Times reported.

The DOL said it will consider workers' opportunity for profit or loss, the permanency of their jobs, and the degree of control a company exercises over a worker, among other factors.

The changes could leave employers responsible for complying with laws relating to FICA, health care, retirement plans and federal regulations that protect employees. Financial and insurance industry advocates are concerned that individual agents and brokers are subject to a patchwork of state and federal regulations under changes favored by the Democrats.

Navigating CMS call rules

AmeriLife executive Bryan Keeven gave good advice on complying with CMS call rules in this August column.

New rules require licensed and certified independent agents record phone calls that result in enrolling a client into a Medicare Advantage or Medicare Part D prescription drug plan.

"Rather than continue to bemoan yet another layer of compliance, it’s important to see the opportunity in front of us," Keeven wrote. "Simply put, we always can do better. The biggest threat to our business always has been the commoditization of the agent-consumer relationship, and these rules help ensure that we continue to be perceived and operate as the trusted advisors we need to be."

Illustration surprise

State regulators announced that it would review the rules governing indexed universal life illustrations — then added a surprise in this August story.

The Life Actuarial Task Force opened a comment period on tweaking Actuarial Guideline 49-A, an effort that would be completed in the fall. But LATF added a twist to its comment period: "plus consideration of limited, targeted revisions to the Life Insurance Illustrations Model Regulation (#582)."

The overall life insurance illustration model regulation effort was an acrimonious process that took years before the NAIC adopted it in 1995. In the decades since, insurers have come up with various product features that have rendered illustration guidelines ineffective, consumer advocates say.

Regulators look to tighten RILAs

Early in 2022, state regulators delved into regulation of nonforfeiture requirements for the hard-to-classify RILA products.

In mid-2021, a National Association of Insurance Commissioners task force created a subgroup to focus solely on the index-linked annuity products, also known as RILAs [registered indexed-linked annuities]. The subgroup developed an actuarial guideline for technical changes to RILA values that would bring the products in line with traditional variable annuities.

Discussion on the proposal continued throughout the year.

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.