Commentary March 16, 2022 at 07:44 AM Share & Print
What You Need to Know
- NAIFA expects the governor of Wisconsin to sign SB 644 by the end of April.
- South Dakota and New Mexico recently updated the new suitability rules.
- California is considering a bill that would conflict with the NAIC suitability update.
Wisconsin may soon become the 22nd state to adopt an annuity sales standards update developed by the National Association of Insurance Commissioners.
The Wisconsin State Senate and Assembly have approved SB 644, an annuity sales standards update bill, and sent it to Gov. Tony Evers.
The Wisconsin chapter of the National Association of Insurance and Financial Advisors expects Evers to sign SB 644 by the end of April, according to a NAIFA report on the bill.
Hawaii lawmakers appear to be well on their way toward passing a similar bill, SB3079.
The Hawaii state Senate passed SB3079 by a 24-0 vote May 8.
The Hawaii Consumer Protection and Commerce Committee is now considering the bill and could become the 23rd state to update its sales standards.
New Mexico and South Dakota recently became the 20th and 21st states to adopt updates.
The state push to update annuity sales standard laws is part of the battle over the U.S. Labor Department’s fiduciary rule effort.
The Labor Department has been trying to set fiduciary rule standards that could eliminate or sharply curtail use of commissions in connection with annuity sales.
The U.S. Securities and Exchange Commission has adopted Regulation Best Interest, which changes sales standards but allows use of sales commissions.
The National Association of Insurance Commissioners — a group for state insurance regulators — developed model language for updating an existing annuity sales standard model. The existing model required annuity sellers to verify that the products offered to consumers suited their needs.
The SEC already regulates the sales of variable annuities.
Many state regulators believe that a non-variable annuity regulation provision in the Dodd-Frank Act requires states to move toward implementation of the NAIC sales standard update by 2026 to keep the SEC from preempting state regulation of non-variable annuities.
What It Means
For annuity specialists who have a strong preference for either a pure, fee-based approach or protecting the current, commission-based system, the battle means that it’s important to continue to keep an eye on Washington and state capitals, and to support the industry groups that are expressing their point of view in sales standards update proceedings.