Home Wealth Management Illinois, Georgia Undertake Greatest Curiosity Annuity Guidelines

Illinois, Georgia Undertake Greatest Curiosity Annuity Guidelines

Illinois, Georgia Undertake Greatest Curiosity Annuity Guidelines


Illinois and Georgia turned the thirty second and thirty third states to undertake guidelines requiring a finest curiosity commonplace for annuity gross sales and suggestions primarily based on a mannequin designed by the Nationwide Affiliation of Insurance coverage Commissioners (NAIC).

Illinois’ Division of Insurance coverage and Director Dana Severinghaus adopted the rule Feb. 14, based on the American Council of Life Insurers, with President and CEO Susan Neely urging extra states to observe go well with.

“The brand new rule in Illinois provides momentum to the nationwide push for protections that safeguard shoppers whereas additionally guaranteeing that middle- and working-class households retain entry to annuities,” she mentioned.

The NAIC mannequin rule, referred to as “Suitability in Annuity Transactions Mannequin Regulation,” was initially finalized in 2020 and supplied states a template to craft their very own annuity regulation or laws. The rule presupposed to align state-level oversight of annuity gross sales and advice with the regulation of securities on the federal degree by way of the Regulation Greatest Curiosity rule from the Securities and Alternate Fee (SEC). 

Whereas the NAIC mannequin mandated that brokers couldn’t put their very own monetary pursuits forward of shoppers, it additionally mirrored Reg BI in not setting a fiduciary commonplace for brokers recommending or promoting annuities. 

The mannequin rule had its critics, together with Birny Birnbaum, the manager director for the buyer advocacy group Middle for Financial Justice, who referred to as the rule “probably the most anti-consumer actions” taken by the fee, arguing its finest curiosity commonplace was woefully inadequate.

“Principally, it takes the suitability commonplace of care, and calls it one of the best curiosity commonplace of care, with one substantive change,” he mentioned on the time.

On the mannequin being finalized, Iowa turned the primary state to go its personal rule primarily based on it in Feb. 2020. Most just lately, Tennessee adopted its personal rule primarily based on the mannequin, finalizing it in January. 

Based on Sarah Wooden, the director for state coverage and regulatory affairs on the Insured Retirement Institute (IRI), as many as 40 states might signal on by the 12 months’s finish. Wyoming is near passing its personal regulation, and Nevada, Utah, West Virginia, Oregon and Washington all have lively proposals to undertake guidelines primarily based on the NAIC mannequin.



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