If you’re one of the many professionals in the insurance industry who wants to see a change in the Department of Labor’s (DOL) fiduciary rule, now may be your chance to make it happen. According to a recent InsuranceNewsNet article, a top department official has said that the best way to go about change would be to provide current data to regulators.
The rule was originally published in April 2016 under President Obama, but in a February 3 memorandum, President Trump ordered the DOL to review the rule, specifically the economic and legal ramifications. Meanwhile, phase one took effect June 9, shortly followed by a DOL published Request For Information, which many believe will lead to a delay of phase two, which is slated to take effect January 1, 2018.
The Department of Labor has been significantly criticized for its lack of reliable and recent data on insurance industry impacts. Most of the original economic analysis came from mutual fund sales data.
“We would welcome additional and better data if people have it that’s very, very specific to the insurance industry,” said Timothy Hauser, deputy assistant secretary for program operations, and the man considered to be behind the fiduciary rule. “The best data that’s available is in the mutual fund space. It’s much harder to get the same data from the insurance world.”
Up until this point, the National Association of Insurance Commissioners (NAIC) and the DOL have had little interaction on the issue, however the NAIC commissioners and Hauser have agreed to work together. A working group was recently formed by the NAIC to examine the possibility of state regulators using key principles of the fiduciary rule for annuity sales. They will focus on the language, among other aspects, of the DOL rule, according to Wisconsin Insurance Commissioner Ted Nickel.
The portions of the fiduciary rule that went into effect on June 9 require agents and advisors to act as fiduciaries, making no misleading statements and accept only “reasonable” compensation. These are the “core” principles of the fiduciary effort, known as the Impartial Conduct Standards, stated Hauser. The second phase requirements have to do with exemptions, which includes hefty disclosures and a signed contract as part of the Best Interest Contract Exemption (BICE).
After being specifically asked why fixed indexed annuities were added to the BICE, Hauser has suggested that everything is up for review.
“That’s certainly one of those issues we will be looking at — should there be a separate exemption for fixed indexed annuities?” he asked. “Should they be put back into 84-24?…We’re interested in whatever feedback we get on what to do.”
The “soft” deadline for comments is August 7, but the department is expected to accept comments after that. According to Hauser, the DOL is not planning to push hard on the industry as long as an effort is being made to comply.
“We’re asking for pretty significant changes in this marketplace under this rule,” he stated. “It’s going to take time for people to figure out exactly. There’s ging to be bumps along the way.”
Written by Rachel Summit