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Wednesday, December 14, 2022

Massachusetts Adopts Greatest Curiosity Annuity Rule

Massachusetts has adopted laws enacting a “greatest curiosity” normal on annuity gross sales and suggestions, in accordance with the American Council of Life Insurers.

In doing so, the Bay State turned the thirtieth state to finalize a rule or regulation based mostly on the Nationwide Affiliation of Insurance coverage Commissioners’ mannequin for annuity gross sales and suggestions that was initially finalized in 2020. Massachusetts follows Alaska, which adopted its personal rule in October.

“In contrast to a fiduciary-only method, these measures make sure that all savers, notably financially weak middle-income People, can entry details about totally different decisions for long-term safety in retirement,” mentioned ACLI President and CEO Susan Neely and Nationwide Affiliation of Insurance coverage and Monetary Advisors (NAIFA)-Massachusetts President Josh O’Gara, in a press release. “We hope different states add to this nationwide effort and undertake these wise protections. Customers working to safe their household’s monetary future ought to profit from a greatest curiosity normal of care irrespective of the place they dwell.”

The NAIC’s 2020 mannequin, entitled “Suitability in Annuity Transactions Mannequin Regulation,” provided states a template to control annuity gross sales and suggestions in a approach that may align with the Securities and Trade Fee’s Regulation Greatest Curiosity, which governs gross sales and suggestions of securities on the federal stage. 

Just like the SEC’s rule, the NAIC’s mannequin stipulates that brokers can not put their very own monetary pursuits forward of the buyer’s, and the mannequin mandated insurers and brokers meet a care, disclosure, battle of curiosity and documentation obligation, akin to the SEC’s regulation.

Iowa turned the primary state to move its personal rule based mostly on the NAIC’s mannequin in 2020, with greater than two dozen states following in its footsteps. Lately, along with Alaska, Hawaii signed laws modeled on the NAIC normal in June, and Colorado Insurance coverage Commissioner Michael Conway adopted an analogous rule in August.



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