Nebraska Gov. Pete Ricketts signed an annuity suitability update bill into law on April 7. The bill, Legislative Bill 22, based on the National Association of Insurance Commissioners’ annuity suitability model update.
The update took effect when Ricketts signed the bill.
One section of the new law requires life insurance agents and brokers to get suitability update training. Producers have until six months after July 1 to get the required training.
The NAIC’s suitability update is supposed to fit with the Securities and Exchange Commission’s Regulation Best Interest, or Reg BI. The update requires an annuity seller to act in the best interest of a consumer considering an annuity.
Producers can continue to collect sales commissions.
Nebraska has become the 10th state to adopt a law or regulation based on the NAIC model update. Other states with similar measures in the pipeline include Nevada, Texas and Virginia.
The American Council of Life Insurers and the National Association of Insurance and Financial Advisors welcomed Nebraska’s update adoption.
The new standards will give consumers more protection while giving lower-income and middle-income families access to retirement security information, according to Susan Neely, ACLI president. Mike Hutchinson, president of NAIFA Nebraska, said life insurance companies and agents strongly support the new law.
However, the Center for Economic Justice questioned whether the update will provide real protections for consumers. Also, the Independent Insurance Agents and Brokers of America suggested that the use of the term “best interest” raises the possibility that lawyers could use the law to bring lawsuits against agents.