Ready, Set, Go! Best Interest Annuity Regulatory Changes in GA, IL, MA, WV, and WY
Georgia, Illinois, Massachusetts, West Virginia, and Wyoming have recently adopted the National Association of Insurance Commissioners (NAIC) updated Suitability in Annuity Transactions Model Regulation (“2020 Model Regulation”), with the relevant effective dates noted:
- Georgia, 8/1/23
- Illinois, 8/1/23
- Massachusetts, 6/1/23
- West Virginia, 6/8/23
- Wyoming, 7/5/23
They join a growing number of states where the regulation is already in effect. The 2020 Model Regulation and corresponding state insurance regulations will require insurance professionals submitting annuity applications in these states to comply with a Best Interest (BI) standard for annuity sales.
Please note: Recommendations of variable products, including annuities, are required to comply with the Securities and Exchange Commission Regulation Best Interest (SEC Reg-BI), regardless of the state of sale. SEC Reg-BI has significant differences from the NAIC’s 2020 Model Regulation, but broker-dealers and insurers may determine that compliance with SEC Reg-BI is sufficient to satisfy the NAIC disclosure requirements for variable annuity sales. Variable-registered insurance professionals should check with their broker-dealer’s compliance officers for more information.
All insurance professionals doing business in any state referenced above should familiarize themselves with the new BI standards described below.
In Massachusetts, insurance professionals who sell securities, including variable annuities, are also required to comply with Massachusetts Securities Division regulation 950. This regulation was published on 2/21/2020 and has been enforceable since 9/1/2020.
Ready
Do you know the basics of what the new 2020 Model Regulation requires for annuity sales? The answer is best explained by comparing the differences and similarities between the new 2020 Model Regulation and the existing 2010 Model Regulation.
The Existing Model Regulation was published in 2010 in order to set standards for suitable annuity recommendations and to require insurers to establish a system to supervise these recommendations, taking into consideration the collection of all suitability information to ensure the needs and financial objectives of consumers were being addressed. Over the last 10 years, most states have adopted this model (refer to Tellus’ Annuity Map).
