The Iowa Insurance Division late in the day on Monday filed an “adopted regulation” to require annuity agents to act in the best interest of their customers.
Iowa’s annuity standard builds on efforts by the National Association of Insurance Commissioners (NAIC) to develop a framework Suitability in Annuity Transactions Model Regulation that is harmonized with rulemaking by the U.S. Securities and Exchange Commission (SEC), as well as a public comment period and hearing by the Iowa Insurance Division.
The regulation adopted Monday includes several important changes relative to the original version published by the Iowa Insurance Division. Most importantly, the Iowa regulation now includes an explicit caveat to the effect that regulated entities that meet the standards prescribed by the SEC’s Regulation Best Interest (Reg BI) will be assumed to be in compliance with Iowa’s regulation.
In a statement accompanying the revised and finalized rule, Iowa Insurance Commissioner Doug Ommen notes that “Iowans expect their financial professional to act in the consumer’s best interest when recommending an annuity.”
“Iowa not only expects it, but we will require it,” he says. “We are very pleased that the NAIC has approved a best interest standard. I hope to also work with other U.S. insurance regulators to require the same of any Iowa insurer writing annuity business in those states.”
Responding to this development, Jason Berkowitz, the Insured Retirement Institute (IRI)’s chief legal and regulatory affairs officer, commends the Iowa regulator for its efforts to harmonize its standards with the federal Regulation Best Interest.
“We congratulate and applaud Commissioner Ommen, Assistant Commissioner [Andrew] Hartnett, and the rest of the Iowa Insurance Division for moving expeditiously to finalize their proposal to adopt the NAIC’s enhanced annuity sales practices model regulation, and for recognizing the need to step back and re-evaluate the proposed best interest standard for broker/dealers,” Berkowitz says. “Given the thorough and transparent process followed by the NAIC to develop a workable best interest standard for annuity recommendations, and the significant leadership role played by Commissioner Ommen in that effort, it is appropriate that Iowa is the first state to formally adopt the updated model. We hope the other states will soon follow Iowa’s lead.”