Insurance News Net: Election Could Reverse Annuity Reg Alignment, Panelists Say
July 30, 2020
Eversheds Sutherland Partner Eric Arnold is quoted in this article by Insurance News Net discussing the potential effects of the next election on annuity regulation alignment. Eric spoke at a panel by the National Association for Fixed Annuities.
Commenting on annuity suitability regulation, Eric said the big news is the rule’s shift from suitability.
"The large font headline is that it moves from suitability to best interest. What's required now with respect to recommendations is rather than making sure that the recommendations are suitable, the recommendation has to be in the best interest of the consumer without placing the producers’, or the insurers’ financial interests ahead of the consumers’ interest."
That best interest standard is built on four pillars: duty of care, disclosure, conflict of interest and documentation. Eric commented that the pillars line up with the SEC’s requirements and seem to be something sellers can work with.
"The care obligation is clearly the fuzziest," he said. "It does not include a definition of best interest. What it does say is that you need to meet the care obligation, you need to know the consumer's financial situation, insurance needs and financial objectives. You need to understand the recommendation."
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