Consumer Protection for Cornhuskers
Lawmakers in Lincoln have passed a law that ensures Nebraska citizens from Omaha to Ogallala will have enhanced consumer protections when buying annuities in the Cornhusker State.
The law, strongly supported by Director of Insurance Bruce Ramge, Chairman of the Nebraska Legislature’s Banking, Commerce, and Insurance Committee Matt Williams, and signed this week by Governor Pete Ricketts, is patterned after the National Association of Insurance Commissioners’ (NAIC) updated model regulation on annuity transactions. The NAIC model enhances the standards financial professionals must follow while ensuring that individual savers preserve access to, and information about, annuities.
Nebraska became the 10th state with a new law or regulation that mirrors the NAIC model. Several other states are considering similar actions to protect their citizens.
These actions by the states also closely align with the Securities and Exchange Commission’s Regulation Best Interest, which took effect last year.
Because of these consumer protections, retirement savers know that financial professionals must act in their best interest when offering recommendations about retirement savings products, including annuities. These standards achieve consumer protection goals while also making sure middle- and working-class families will continue to be able to access practical and understandable financial information.
This access is critically important now, given the economic uncertainty caused by COVID-19.
Many Americans are rightfully concerned about their retirement security. These concerns can be greatly eased through financial security tools, including annuities. Annuities are the only financial product in the marketplace that can provide guaranteed income for life.
Americans receive valuable information and education about annuities from insurance agents and other financial professionals. Now more than ever, consumers need to have access to the peace of mind that comes from guaranteed lifetime income. And they deserve to know that financial professionals must act in their best interest when recommending annuity products.
National adoption of the NAIC model will provide consumers that certainty.
We look forward to more states following the lead of Nebraska and the other proactive states. Soon, all consumers, regardless of where they live, will benefit from a best interest standard of care.
(Mike Hutchinson, is the president of NAIFA-NE. He owns his own financial advising firm, Hutchinson and Associates, in Grand Island, Nebraska, and serves on numerous state and local boards and campaigns.)
(Robert M. Bell is the Executive Director of the Nebraska Insurance Federation, the state trade association of Nebraska-based insurers. He is also the founder and owner of Robert M. Bell, P.C. L.L.O, a law firm.)