Gov. Ron DeSantis of Florida officially started his campaign for the Republican presidential nomination Wednesday, and he also helped efforts to keep traditional annuity sales commissions alive, by signing state House Bill 1185.
House Bill 1185 includes the annuity sales rule model update developed by the National Association of Insurance Commissioners.
Florida became the 37th state to adopt the NAIC model update.
California and New York are now the only states that rank among the top five in terms of population that have not adopted the model.
What It Means
States may still have a chance to keep the Securities and Exchange Commission from regulating the sales of fixed annuities the same way it regulates sales of variable annuities.
The Background
Regulators and consumer advocates have been clashing for decades over the standards that should apply to financial services sales.
Under former President Barack Obama, the Labor Department tried to impose a strict fiduciary standard, which could have eliminated, or sharply restricted, use of volume-based sales incentives and could have pushed down sales of nonvariable indexed annuities.
The Labor Department gave up on the fiduciary rule effort during the administration of former President Donald Trump. Now, under President Joe Biden, it's reviving the fiduciary rule effort.
During the Trump administration, the SEC developed Regulation Best Interest. Reg BI requires financial services product sellers to document that they understand a customer's needs, have considered a wide range of potential solutions, and have tried to recommend the best solution. It appears to allow use of sales commissions.
The NAIC Update
The NAIC developed an annuity transactions model intended to protect older consumers in 2003, and it emphasized insurance company sales rep supervision responsibilities in a 2010 update.
