“There wasn’t enough time to get answers, so we are hoping to have another call with regulators before we submit our comments,” Birnbaum said. “We aren’t jumping to conclusions good or bad.”
Other requirements in the NAIC draft:
• Create a definition of “best interest” that includes: "at the time the annuity is issued, acting with reasonable diligence, care, skill and prudence in a manner that puts the interest of the consumer first and foremost."
• Note that "best interest" does not mean “a resulting recommendation is the least expensive annuity product, or the annuity product with the highest stated interest rate.”
• Prohibit producers from receiving "more than reasonable cash compensation" in connection with making a recommendation.
After the comment period ends January 22, the working group will meet again to revise its draft. The process will continue with drafts and comment periods, with the goal of presenting a draft rule at the NAIC’s spring conference, Cameron said.
“We are trying to find balance between protecting the consumer and keeping the industry working and allowing these products to be available,’ said the regulator who was an insurance agent for 30 years before becoming Idaho’s insurance commissioner three years ago.
The NAIC will work to create rules that “harmonize” with the U.S. Department of Labor’s fiduciary rules, said Cameron. However, “with annuities, the DOL standard as it stands raises the standard for annuities producers that makes them nearly impossible to operate, especially for small producers.”