Georgia, Illinois and Tennessee have adopted an annuity sales standard update developed by the National Association of Insurance Commissioners.
The states adopted revisions to the Suitability in Annuity Transactions through regulation changes.
The NAIC designed the update to complement the U.S. Securities and Exchange Commission's Regulation Best Interest sales standard, and at least 33 states have now adopted it.
What It Means
Some regulators believe that, if enough states fail to adopt the NAIC's update in a uniform way, it's possible that the SEC could gain the ability to oversee at least some aspects of sales of fixed annuities. The SEC already shares in overseeing sales of variable annuities.
The new wave of update adoptions could lead to new customer profiling, recordkeeping and continuing education requirements in the affected states, and it could reduce the odds that the SEC will get more jurisdiction over annuity sales.
The American Council of Life Insurers and the National Association of Insurance and Financial Advisors, which are promoting rapid state adoption of the sales standard update, contend that a shift away from sales commissions, and toward fee-based-only advisor compensation, would hurt lower-income retirement savers, who, in the view of the ACLI and NAIFA, are less likely to be able and willing to pay advisory fees.
