Three more states adopt annuity suitability rules

Virginia, Maine and Alabama recently adopted rules tracking the model ‘best interest’ measure approved in 2020 by the National Association of Insurance Commissioners.

Virginia, Maine and Alabama recently adopted annuity suitability rules that closely track model legislation proposed by the National Association of Insurance Commissioners.

Two industry trade groups — the American Council of Life Insurers and the National Association of Insurance and Financial Advisors — issued joint statements on the states’ actions, saying the new laws and regulations “align with the SEC’s Regulation Best Interest and, unlike a fiduciary-only approach that limits choices for consumers, these measures make sure savers, particularly financially vulnerable middle-income Americans, can access information about options for long-term security through retirement.”

In February 2020, the National Association of Insurance Commissioners approved a model rule that clarified that annuity recommendations by insurance agents and carriers must be in the best interests of consumers and that salespeople cannot put their financial interests ahead of those of the consumer.

That rule had already been approved by Arkansas, Michigan, Iowa, Arizona and Rhode Island.