Constitution, Nutmeg and Consumer Protection
Connecticut has long been known as the Constitution State. It’s also called the Nutmeg State.
But thanks to recent actions by the Connecticut Insurance Department, it might be time for a new nickname: the Consumer Protection State.
Connecticut recently adopted an important new regulation that incorporates the enhanced consumer protections in the National Association of Insurance Commissioners’ (NAIC) updated model regulation on annuity transactions.
The regulation enhances the standards financial professionals must follow while ensuring that individual savers maintain access to, and information about, annuities, the only financial product in the marketplace that can provide guaranteed income for life. This is a huge victory for Connecticut savers.
Fifteen other states have adopted similar rules or laws. Building on this momentum, several other states are considering similar measures to protect their citizens.
The actions in the states closely align with the Securities and Exchange Commission’s Regulation Best Interest, which took effect last year. And, unlike a fiduciary-only approach, these measures ensure that savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security through retirement.
With these enhanced state and federal consumer protections, savers can be assured that financial professionals must act in the consumer’s best interest when offering recommendations about annuities. The U.S. Congress confirmed the importance of lifetime income when it passed legislation in 2019 that made it easier for employers to include annuities in workplace retirement plans. These protections safeguard consumers while also making sure that middle- and working-class families will continue to have access to practical and understandable financial information.
More states should follow Connecticut with this sensible consumer protection. Then more consumers across America looking to protect their family’s financial future will benefit from a best interest standard of care, no matter where they live.
(NAIFA-CT President Sofia Dumansky is from Windsor, Connecticut.)