Illinois and Georgia turned the thirty second and thirty third states to undertake guidelines requiring a greatest curiosity commonplace for annuity gross sales and suggestions based mostly on a mannequin designed by the Nationwide Affiliation of Insurance coverage Commissioners (NAIC).
Illinois’ Division of Insurance coverage and Director Dana Severinghaus adopted the rule Feb. 14, in line with the American Council of Life Insurers, with President and CEO Susan Neely urging extra states to observe swimsuit.
“The brand new rule in Illinois provides momentum to the nationwide push for protections that safeguard customers whereas additionally guaranteeing that middle- and working-class households retain entry to annuities,” she mentioned.
The NAIC mannequin rule, known as “Suitability in Annuity Transactions Mannequin Regulation,” was initially finalized in 2020 and supplied states a template to craft their very own annuity regulation or laws. The rule presupposed to align state-level oversight of annuity gross sales and suggestion with the regulation of securities on the federal stage through the Regulation Greatest Curiosity rule from the Securities and Alternate Fee (SEC).
Whereas the NAIC mannequin mandated that brokers couldn’t put their very own monetary pursuits forward of customers, it additionally mirrored Reg BI in not setting a fiduciary commonplace for brokers recommending or promoting annuities.
The mannequin rule had its critics, together with Birny Birnbaum, the chief director for the buyer advocacy group Heart for Financial Justice, who known as the rule “one of the vital anti-consumer actions” taken by the fee, arguing its greatest curiosity commonplace was woefully inadequate.
“Principally, it takes the suitability commonplace of care, and calls it the most effective curiosity commonplace of care, with one substantive change,” he mentioned on the time.
On the mannequin being finalized, Iowa turned the primary state to move its personal rule based mostly on it in Feb. 2020. Most just lately, Tennessee adopted its personal rule based mostly on the mannequin, finalizing it in January.
In response to Sarah Wooden, the director for state coverage and regulatory affairs on the Insured Retirement Institute (IRI), as many as 40 states could signal on by the yr’s finish. Wyoming is near passing its personal regulation, and Nevada, Utah, West Virginia, Oregon and Washington all have lively proposals to undertake guidelines based mostly on the NAIC mannequin.