Everyone Should Listen
It’s hard to imagine anyone caring more about insurance consumers than state insurance commissioners.
The insurance commissioners in all 50 states share one primary objective: protecting consumers.
That is their mission. Which is why when insurance commissioners are compelled to comment publicly about an issue that could harm consumers, everyone should pay attention.
On behalf of the National Association of Insurance Commissioners, the four leaders from Missouri, Connecticut, North Dakota and Virginia wrote in late December to the U.S. Department of Labor, sharing their concerns about the DOL’s fiduciary-only proposal. Then-NAIC President Chlora Lindley-Myers of Missouri, then-President Elect Andrew Mais of Connecticut, then-Vice President Jon Godfread of North Dakota and then-Secretary-Treasurer Scott White of Virginia said: “While the NAIC typically refrains from commenting on the rule proposals of fellow regulators unless they are directly preemptive of our authorities, in this instance, we are compelled to respond given the potentially significant impact the Proposed Rule would have on insurance consumers and access to lifetime income products in retirement.”
The DOL proposed a similar fiduciary-only regulation in 2016. A Deloitte LLP study found that regulation resulted in more than 10 million small retirement account owners with more than $900 billion in savings losing access to their financial professionals in 2017.
The DOL regulation ultimately was vacated by a federal court in 2018. Since that time, 41 states have adopted new rules or laws that incorporate the enhanced consumer protections in the NAIC’s updated model regulation on annuity transactions. These actions in the states closely align with the Securities and Exchange Commission’s Regulation Best Interest. And unlike the DOL proposal, these measures ensure savers, particularly financially vulnerable lower- and middle-income Americans, can access annuities and information about other options for their retirement savings.
Iowa was the first state to adopt the NAIC model regulation. In his own letter to the DOL, Iowa Insurance Commissioner Doug Ommen said, “Consumer protection is achieved through smart, consistent and sophisticated enforcement of consumer protection standards, not by the (DOL’s) approach of restricting consumer access to high quality annuity products.”
It’s no wonder that so many leaders were willing to speak out on this issue. Hopefully, the DOL will hear the growing chorus of voices and withdraw its fiduciary-only proposal.
Commissioner Ommen said it best: “When 50 state regulators, all dedicated to protecting consumers, are joined by the SEC in rejecting a uniform fiduciary standard in order to protect consumers’ access to services and products, the (DOL) should listen.”