The National Association of Insurance Commissioners just had a fall meeting to discuss the changing regulation needs regarding annuities, according to “Taking on the next steps in annuity regulation” by Brian Atchison of Investment News. Consistency across the U.S. seems to be the biggest problem relating to annuity regulation. State and federal regulators are in charge of overseeing variable annuity sales transactions, but they have differences in their policies. Fixed and indexed annuities are only regulated by state agencies who follow the guidelines of the NAIC. This is all changing with new regulations.
The NAIC’s Suitability in Annuity Transactions Model Regulation has been adopted by 41 states. It basically says that any annuity being sold has be suitable to the purchasers’ needs and will be subject to regulators if it is not. Unfortunately all states have not adopted the regulations and those that have are interpreting the rule in their own ways, so nothing is standard across the U.S. The Insurance Marketplace Standards Association and Finra have proposed that the NAIC give more guidance, direction and greater enforcement to the 41 states following their guidelines. With that proposal, the NAIC has decided not to change their current guidelines, but to focus on meshing them with Finra Rule 2821. As IMSA, the NAIC, and Finra are able to work together to regulate annuities, it can only help consumers’ interests.