Earlier this year, Iowa’s Insurance Department approved a best interest annuity rule that closely follows the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation.
A few weeks later, Arizona Governor Doug Ducey signed a bill into law that also mirrors the NAIC model.
Iowa and Arizona demonstrated how states can provide people purchasing annuities with enhanced consumer protection and protect access for lower and middle income Americans to retirement savings options. The states’ actions also closely align with Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI), which went into effect on June 30.
Whether by department rule (Iowa) or legislation (Arizona), retirement savers in the Hawkeye State and Grand Canyon State can feel confident that their interests are protected.
Several more states are considering legislation like Arizona’s. And the American Council of Life Insurers is working to have all 50 states adopt these sensible protections.
The robust state-based system of insurance regulation has for generations safeguarded consumers. And life insurers have been keeping their promises to consumers for more than 175 years. Through every national emergency, including World Wars I and II, the Great Depression, and the current COVID-19 pandemic, the state-based system of insurance regulation has worked for consumers.
The assurances that the NAIC model and Reg BI provide are particularly important now.
Worries about retirement security have been heightened by the economic disruption and market volatility spawned by COVID-19.
Life insurers offer retirement savings products, including annuities, that can ease those concerns. Annuities are the only product that provides guaranteed income for life.
The NAIC model and Reg BI require financial professionals to act in the best interest of consumers when offering guidance and information about all forms of retirement savings products, including annuities.
As more states follow Iowa and Arizona’s lead and adopt department rules or pass legislation regarding annuity sales that mirror the NAIC model, consumers across America will be protected by meaningful new requirements and access to retirement savings options.
Michelle Carroll Foster is Chief Inclusion Officer at the American Council of Life Insurers (ACLI). She joined ACLI in 2019.
