Connecticut Adopts ‘Best Interest’ Rule for Annuities
From the Desk of Jim Eccleston at Eccleston Law:
Connecticut has become the 16th state to approve legislation governing the sales of annuity products based on a model rule designed by the National Association for Insurance Commissioners (NAIC). The NAIC rule, which was adopted in 2020, was created to balance state rules on annuity sales with the Securities and Exchange Commission’s (SEC’s) Regulation Best Interest. The SEC’s Regulation Best Interest outlines compliance standards for securities sales and recommendations on the federal level. According to the American Council for Life Insurers (ACLI) CEO Susan Neely, the rule approved by Connecticut’s Insurance Department was designed based on the “enhanced consumer protections” detailed in the NAIC’s model regulation.
Since the NAIC adopted the model rule in February 2020, several states including Iowa, Maryland, Ohio, Idaho and Virginia have approved their own legislation based on the NAIC’s model rule. States such as Kentucky, Nevada and Pennsylvania are also considering adopting their own Reg BI rule, according to chief legal counsel for the Insured Retirement Institute, Jason Berkowitz. Berkowitz added that additional guidance related to Reg BI would likely not cause the NAIC to revise its model rule while states will most likely not be forced to adopt their own rules.
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