PLANADVISER - March/April 2021 - 6

Legislative and Judicial Actions
compliance news //
States Updating Annuity
Standards
Virginia is the latest state to
consider adopting a version of
the model annuity transaction
suitability framework
finalized early last year
by the National Association
of Insurance
Commissioners (NAIC).
These
rules
establish
the standards that an
insurance agent or
insurer must follow
when
recommending
or selling an annuity
to state consumers; the
proposed
suitability
amendments
generally align with the
enhanced
in
annuity transactions model
regulation the NAIC approved.
The NAIC is the country's
main standard-setting and regulatory
support organization created and
governed by the chief insurance regulators
from the 50 states, Washington,
D.C., and five U.S. territories. Through
the NAIC, state insurance regulators
establish standards and best practices,
conduct peer reviews and otherwise
coordinate their regulatory oversight.
Supporters of the updated NAIC
best interest framework include the
Insured Retirement Institute (IRI),
which says the revised suitability model
is appropriately consistent with the
Securities and Exchange Commission
(SEC)'s Regulation Best
Interest (Reg
BI). The NAIC model includes language
that directly provides a regulatory safe
harbor for all insurance producers that
are subject to, and actually comply
with, equivalent or greater conduct
standards, including Reg BI or the
Investment Advisers Act of 1940.
Supporters say this approach helps to
avoid duplicative compliance requirements
for those producers who already
comply with rigorous standards.
In embracing the NAIC framework,
Virginia joins a growing list of
states that have done the same. These
Biden administration could choose
to modify, update or even rescind
Reg BI, though sources say this
is far from a given. While this
would not entirely derail
what the states have done,
as the safe harbors often
also cite the Investment
Advisers Act or the
Department of Labor
(DOL) fiduciary standards,
to eliminate Reg
BI could cause ambiguity
in the different
state-based conflict of
interest rules.
Senate Confirms a
Labor Secretary
The U.S. Senate approved
the nomination of Marty
Walsh to the role of Labor
secretary on March 22. The affirmative
vote comes at a critical time
In embracing
the NAIC
framework,
Virginia joins a
growing list of
states that have
done the same.
include Arizona, Arkansas, Idaho, Iowa
and Ohio. In Idaho, the recent adoption
was mandated by a law passed in
the state house of representatives and
signed by the governor.
Notably, other states, including
New York, have taken steps to create
frameworks that are more restrictive
than the NAIC model.
One matter that could potentially
complicate the progress of the suitability
framework is the fact that the
for the Department of Labor (DOL),
which is expected to play a big role
in the Biden administration's effort to
help the U.S. economy bounce back
from the ongoing coronavirus crisis.
Beyond issues related to the surge
in unemployment and the outsized
impact the pandemic has had on small
businesses and communities of color,
the DOL is also engaged in other key
regulatory projects. Notable among
these is the restatement of fiduciary
duty under the Employee Retirement
Income Security Act (ERISA) and the
implementation of provisions of the
Setting Every Community Up for Retirement
Enhancement (SECURE) Act.
Retirement
industry stakeholders
were disappointed at how relatively
little of the hearing's airtime, either on
the part of Walsh or the questioning
senators, was dedicated to retirement
security issues. Given Walsh's deep ties
to organized labor, the nominee and
senators paid some attention to the
multiemployer union pension funding
crisis, but much more time went to
the federal minimum wage, systemic
economic inequality and the broader
6 | planadviser.com March-April 2021 Art by Gizem Vural
http://www.planadviser.com
PLANADVISER - March/April 2021

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