States Race Forward with NAIC Best Interest Adoption

Several more states are moving quickly to add a best-interest annuity sales standard to its regulation of insurance products. The latest states to adopt the best-interest model law put forth by the National Association of Insurance Commissioners (NAIC) are Alabama and Michigan.

In February 2020, the NAIC adopted a model law that articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. With the outbreak of COVID-19, states were slow to adopt the model in the months that followed.

States handle regulations such as this in two ways: either via rules published by state regulators, or as legislation. Here is the latest list of states with adopted regulation:

Alabama

Alabama’s amended rule took effect January 1, 2021, Commissioner Jim Ridling said, and is modeled after the best-interest rules the National Association of Insurance Commissioners approved earlier this year. Quest CE currently has content approved and is pending additional information from the state on when producers should comply by.

Quest CE 1-Hour Course: Approved

Quest CE 4-Hour Course: Approved

Arizona

Effective January 1, 2021, Arizona will require producers to act in the best interest of the consumer when recommending an annuity. Producers who have already completed the original training requirement before January 1, 2021 must complete either a new one-time 4-hour course or an additional one-time 1-hour course before July 1, 2021. Producers who obtain a life insurance license on or after the effective date must complete the new one-time 4-hour course before selling annuities.

Quest CE 1-Hour Course: Approved

Quest CE 4-Hour Course: Approved

Arkansas

Effective December 28, 2020, Arkansas released a bulletin that will require producers to act in the best interest of the consumer when recommending an annuity. Producers who are already selling annuities have 6 months from the effective date to complete the training. Producers who have already completed an annuity course before 1/1/2021 must complete either a new one-time 4-hour course or an additional one-time 1-hour course within 6 months. Producers who obtain a life insurance license on or after the effective date, must complete the new one-time 4-hour course before selling annuities. According to the bulletin, the industry will be allowed six (6) months from the effective date of Rule 82 to comply with the amended provisions.

*Both Arkansas and Rhode Island have proposed their own sets of rules that follow a similar framework as Reg BI, and therefore, will require state-specific content to be filed.

Iowa

Effective January 1, 2021, Iowa will require producers to act in the best interest of the consumer when recommending an annuity. Producers who have already completed the original training requirement before January 1, 2021 must complete either a new one-time 4-hour course or an additional one-time 1-hour course before July 1, 2021. Producers who obtain a life insurance license on or after the effective date must complete the new one-time 4-hour course before selling annuities.

Quest CE 1-Hour Course: Approved

Quest CE 4-Hour Course: Approved

Michigan

The state legislature adopted a best-interest update that was signed into law by Gov. Gretchen Whitmer on December 29, 2020. Quest CE is pending additional information from the state on when producers should comply by, although unconfirmed media reports are saying an effective date of June 29, 2021.

Rhode Island

Effective April 1, 2021, Rhode Island will require producers to act in the best interest of the consumer when recommending an annuity. Producers who have already completed the original training requirement before April 1, 2021 must complete either a new one-time 4-hour course or an additional one-time 1-hour course before October 1, 2021. Producers who obtain a life insurance license on or after the effective date must complete the new one-time 4-hour course before selling annuities.

*Both Arkansas and Rhode Island have proposed their own sets of rules that follow a similar framework as Reg BI, and therefore, will require state-specific content to be filed.

Quest CE 1-Hour Course: Approved

Quest CE 4-Hour Course: Approved


States with pending NAIC proposals include: Delaware, Kentucky, Maine, Nebraska, Nevada and Ohio. New York’s rule is not based on the NAIC model. For up-to-date results, visit Quest CE’s annuity suitability platform here. If you’re an insurance carrier that would like to host product training/state training through our NAIC portal, click here to contact us today.