Issue Status Chart: State Best Interest/Standard of Care & Fiduciary Duty

Listed below is a compilation of state legislative and regulatory proposals that adopt the NAIC’s Suitability in Annuity Transactions Model Regulation (#275) (Annuity Suitability & Best Interest Standard) or fiduciary standard of care for annuity transactions.

ACLI staff will update this chart as new information becomes available.

Contacts

Michelle Carroll Foster, (202) 624-2457
Robbie Meyer, (202) 624-2184
Vytas Aukstuolis, (202) 624-2403

Additional Resources

ACLI’s Annuity Issue Page
• Bill text, digest and legislative history are available in ACLI’s Legislative Tracker
• Proposed regulations, adopted regulations, administrative material, and enacted legislation can be found through ACLI’s Advance Services

Best Interest/Standard of Care

Last updated: October 23, 2020
StateBill/RegulationDescriptionExisting Law/RegulationDevelopmentsStatus
Alabama
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.ALA. Admin. Code R. 482-1-137-06The ACLI & the AALIC submitted a letter to urge the Alabama Department of Insurance (DOI) to modify the “Suitability in Annuity Transactions” Regulation, Alabama Administrative Code Chapter 482-1-137, to incorporate the best interest revisions to the NAIC Suitability in Annuity Transactions Model Regulation (Suitability Model), adopted by the NAIC earlier this year.Proposal
Arkansas
Proposed Amended Rule 82Would adopt the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation054.00.82 ARK. CODE R. §§ 1 to 10The Arkansas Department of Insurance proposed a rule to adopt the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation. The hearing was scheduled for October 22, 2020.Active
Arizona
S. 1557Adopts the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation.ARIZ. REV. STAT. ANN. §§ 20-1243.01 to 1243.06. 2010 NAIC Annuity Suitability Model adopted in 2017. 2006 model training requirements statute passed in 2017.Introduced 2/3/2020

Passed committee as amended 2/12/2020

Passed Senate 2/20/2020

Passed House committee 3/9/2020

Passed House 5/19/2020

Sent to Governor 5/26/2020

Signed by Governor 6/5/2020
Complete
Delaware
No textWould adopt the most recent revisions changes to the NAIC Annuity Suitability in Annuity Transactions Model Regulation.Title 18 : 1214 Suitability In Annuity TransactionsThe ACLI prepared a draft of best interest amendments to existing annuity suitability regulation to incorporate the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation. The ACLI coordinated with NAIFA national and the DE NAIFA chapter to submit the draft to the Department. The Commissioner previously requested ACLI to draft the amendments and submit to his office for review prior to proposal.Proposal
Idaho
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation with minor changes.ID ST § 41-1940Director Cameron has shared draft legislation to enact the NAIC Suitability in Annuity Transactions Model Regulation. The Idaho Legislative Session is expected to convene January 11, 2021. Proposal
Iowa
Adopted Best Interest RegulationImplements the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation.

Effective January 1, 2021
IOWA ADMIN. CODE r. 191-15.72 to 191.15.78Proposed 3/24/2020 Comments due: 4/28/2020
Adopted 05/11/2020
Complete
Kentucky
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.806 KAR 12:120In an NAIC Annuity Suitability Working Group video conference, ACLI learned that Kentucky plans to consider a rule this year.Proposal
Michigan
H.6112Would adopt Model definitions.MICH. COMP. LAWS ANN. §§ 500.4151 to 500.4165Four bills were introduced on 8/17 that would modify current law to incorporate the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation. Each bill is tie-barred, which means that the bills must be passed as a package to become law.

The Department is supportive of the measures. ACLI and industry will take the lead on pushing the legislation.
Active
Michigan
H.6113Would adopt the Model best interest standard.MICH. COMP. LAWS ANN. §§ 500.4151 to 500.4165See H. 6112Active
Michigan
H.6114Would adopt Model training requirementsMICH. COMP. LAWS ANN. §§ 500.4151 to 500.4165See H. 6112Active
Michigan
H.6115Would adopt the Model safe harborMICH. COMP. LAWS ANN. §§ 500.4151 to 500.4165See H. 6112Active
Nebraska
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.NE ST § 44-8106The Nebraska Department of Insurance shared that they intend to introduce annuity suitability legislation in the 2021 Legislative Session assuming they have the backing of the
Governor’s office.
Proposal
Nevada
No textWould adopt the most recent revisions changes to the NAIC Annuity Suitability in Annuity Transactions Model Regulation.2006 NAIC Annuity Suitability Model adopted in 2006.The Insurance Division has released an informal initial draft of proposed modifications to the Nevada annuity suitability regulations to incorporate the newest amendment to the NAIC Suitability in Annuity Transactions Model Regulation. The initial draft incorporates some of the recent revisions to the NAIC model but not the best interest language. Formal rulemaking has not yet begun.Proposal
New Jersey
No textWould adopt some of the most recent revisions changes to the NAIC Annuity Suitability in Annuity Transactions Model Regulation.N.J. ADMIN. CODE §§ 11:4-59A. 2010 NAIC Annuity Suitability Model adopted in 2013.ACLI is working closely with Prudential on developing a game plan to introduce the newest amendments to the NAIC Suitability in Annuity Transaction Model Regulation in NJ.

ACLI is working on outreach to the Department of Banking and Insurance (DOBI).However, outreach to the DOBI has stalled due to COVID 19.
Proposal
North Dakota
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.NDCC, 26.1-34.2-02The ACLI is working closely with The Insurance Department and has prepared a draft regulation.Proposal
Ohio
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.OAC 3901-6-13The ACLI submitted supportive comments to the Ohio Department of Insurance proposed updates to its “3901-6-13 Suitability Annuity Transactions” rule. The state’s Director of Insurance, Jillian Froment, chaired the National Association of Insurance Commissioner’s Annuity Suitability Working Group while the working group crafted revisions to the NAIC’s “Suitability In Annuity Transactions Model Regulation (#275).” The Ohio proposal is similar to the model.

The rule was posted for public review on October 8th. The comment period end date is October 23rd.
Proposal
Rhode Island
Proposed Rule 230-RICR-20-25-1Would adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.230 RI ADC 20-25-1.6Comments to the Department of State were due by October 9th.

ACLI submitted comments in favor of the proposal.
Active
Tennessee
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model Regulation.TENN. COMP. R. & REGS. 0870-01-86-.06The ACLI has shared a draft with the Department of Commerce and Insurance, which is now reviewing the draft.Proposal
Texas
No textWould adopt the most recent revisions changes to the NAIC Annuity Suitability in Annuity Transactions Model Regulation.Title 7, Chapter 1115, Insurance CodeACLI and the Texas Association of Life & Health Insurers are working on a draft bill to modify current Texas annuity suitability law to incorporate the newest amendments to the NAIC Suitability in Annuity Transactions Model Regulation.Proposal
Wisconsin
No textWould adopt the most recent revisions to the NAIC Suitability in Annuity Transactions Model RegulationW.S.A. 628.347The ACLI and the Wisconsin Association of Life Insurers are working with the Office of the Commissioner of Insurance with the intent to develop a consensus draft for consideration.Proposal

Fiduciary Duty

Last updated: October 23, 2020
StateBill/RegulationDescriptionExisting Law/RegulationDevelopmentsStatus
Connecticut
S.343Would require a financial planner to disclose to a consumer, upon request, whether the financial planner has a fiduciary duty to such consumer for each recommendation that the financial planner makes to the consumer regarding insurance.

Effective date: October 1, 2020
CONN. AGENCIES REGS. §§ 38a-432A-1 to 38a-432A-8Introduced 2/27/2020

Passed committee 3/10/2020

Failed upon adjournment 5/6/2020
Failed
Massachusetts
950 CMR 12.2.04+Would establish a fiduciary duty of broker-dealers and prescribed requirements. Does not include life insurers.950 CMR T. 950, Ch.12.200Proposed 12/13/2019

Adopted 2/21/2020

Effective 3/6/2020
Complete
Nevada
No textWould establish a fiduciary duty of broker- dealers and prescribed requirements.NEV. ADMIN. CODE §§ 688A.400The rule is still pending in the Secretary of State’s office which oversees securities.

ACLI argues that this rule should not apply to annuities since the Insurance Commissioner has sole authority over those products. However, variable annuities appear to fall within the definition of a security in Nevada.
Proposal
New Jersey
Proposed RuleWould establish a fiduciary duty of broker- dealers and prescribed requirements.N.J.A.C. 13:47A-6.4 (Proposed Rule)Governor Phil Murphy issued Executive Order 127 on April 14, extending certain administrative deadlines an additional 90 days. Included is a 90-day extension of the one-year expiration date of all proposed rules that were published in the New Jersey Register on or after April 15, 2019 which includes this rule.Proposal
New York
Regulation 18711 NYCRR 224.3Adopted 5/17/2019Complete
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