Worthy of Applause
The record-breaking accomplishments by homegrown sports legends Cal Ripken Jr., Katie Ledecky and Michael Phelps will long be remembered by Marylanders.
The achievements by Kathleen Birrane and her hard-working colleagues at the Maryland Insurance Administration will never receive attention like the sports stars, of course. But Maryland’s insurance commissioner and her team just accomplished something ground-breaking that Maryland residents will be applauding for years to come.
The Maryland Insurance Administration recently enacted a rule that incorporates the enhanced consumer protections in the National Association of Insurance Commissioners (NAIC) updated model regulation on annuity transactions.
The rule 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 lifetime income. This is a monumental victory for Maryland savers.
Maryland became the 22nd state to adopt similar laws or rules. 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. And, unlike a fiduciary-only approach, these measures ensure savers, particularly financially vulnerable lower and middle-income Americans, can access information about different choices for long-term security through retirement. According to a recent study, a fiduciary-only approach would shut down access to financial inclusion for 10 million households.
With these enhanced state and federal consumer protections, savers can rest assured that financial professionals must act in the consumer’s best interest when offering recommendations about annuities. The U.S. Congress reaffirmed 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 ensuring that middle- and working-class families will retain access to easy-to-understand financial information.
More states should follow Maryland and adopt this practical consumer protection. Then more consumers across the country looking to protect their family’s financial future would benefit from a best interest standard of care, no matter where they call home.
Paul Dougherty, NAIFA-MD member, is from Hyattsville, Maryland.
Matthew Celentano is Executive Director of the League of Life and Health Insurers of Maryland.