The Iowa Insurance Division filed an adopted regulation to require annuity agents to act in the best interest of their customers on May 11. Iowa’s annuity standards follow efforts by the National Association of Insurance Commissioners (NAIC) to develop a model Suitability in Annuity Transactions Model Regulation that is harmonized with rulemaking by the U.S. Securities and Exchange Commission (SEC) as well as a public comment period and hearing by the Iowa Insurance Division.
“Iowans expect their financial professional to act in the consumer’s best interest when recommending an annuity. Iowa not only expects it, but we will require it,” said Iowa Insurance Commissioner Doug Ommen. “We are very pleased that the NAIC has approved a best interest standard. I hope to also work with other U.S. insurance regulators to require the same of any Iowa insurer writing annuity business in those states.”
I am thankful for the many thoughtful industry comments during this process. When regulatory changes are made, it’s important to make sure implementation timelines work for all parties. We received several comments requesting that due to COVID-19 we delay the proposed best interest standard in our securities regulations,” said Ommen, who is also the state’s securities regulator. “We have decided that is the appropriate course. I anticipate proposing best interest securities standards again later this summer.”
American Council of Life Insurers (ACLI) President and CEO Susan Neely was quick to thank Ommen for his leadership in advancing the important consumer protections at the NAIC and in his home state. “We also urge other states to adopt the NAIC model so that all consumers, regardless of where they live, will benefit from a national best interest standard of care,” Neely said.
“Iowa is setting the pace for states in adopting enhanced, harmonized protections for consumers who purchase annuities for lifetime income,” Neely added. “Retirement savers should be confident that financial professionals are acting in the best interest of consumers. The new rule achieves this goal.”
Jason Berkowitz, Chief Legal and Regulatory Affairs Officer at the Insured Retirement Institute, also issued a statement regarding the action on Monday.
“We congratulate and applaud Commissioner Ommen, Assistant Commissioner Hartnett, and the rest of the Iowa Insurance Division for moving expeditiously to finalize their proposal to adopt the NAIC’s enhanced annuity sales practices model regulation, and for recognizing the need to step back and re-evaluate the proposed best interest standard for broker-dealers,” Berkowitz said. “Given the thorough and transparent process followed by the NAIC to develop a workable best interest standard for annuity recommendations, and the significant leadership role played by Commissioner Ommen in that effort, it is appropriate that Iowa is the first state to formally adopt the updated model. We hope the other states will soon follow Iowa’s lead.”
Click here to view the adopted regulation. The final adopted regulation is anticipated to be published in the Iowa Administrative Bulletin on June 3, 2020.