Oklahoma has adopted a best-interest rule for annuities based on the model created by the National Association of Insurance Commissioners, making it the 40th state to do so.
The new rule will be officially posted to the Oklahoma State Registry in August and take effect September 1, according to the Insured Retirement Institute, which has lobbied for states to adopt rules or laws modeled on the NAIC standard.
The model of the NAIC, which was completed in 2020provided states with a template for creating requirements to align regulation of annuity sales and recommendations with federal regulation of securities through the Securities and Exchange Commission’s Regulation Best Interest Rule.
The NAIC model states that agents are not permitted to put their own financial interests ahead of clients, but like Reg BI, the rule does not mandate a fiduciary standard.
Shortly after NAIC completed their model, Iowa became the first state create your own rule based on the NAIC template. Other states followed suit in the months and years that followed. So far this year Tennessee, Illinois, Georgia, Washington, Wyoming, Florida, Oregon and Kansas have made their own rules or laws based on the NAIC best interest standard.
According to Sarah Wood, IRI’s director of state policy and regulatory affairs, IRI is urging at least 40 states to adopt rules or legislation modeled on the NAIC template in 2023.
In an interview with WealthManagement.comWood said that the fact that so many states are adopting largely uniform compliance measures will help agents do their jobs and help clients who may be moving between states.
“Understanding what compliance expectations are going to be and what needs to be done to meet regulatory requirements is beneficial for consumers and manufacturers,” she said. “When it comes to compliance, that clarity and consistency is critical.”
According to Wood, California, Utah and New Hampshire have all proposed rules similar to the NAIC model and could complete them before the end of the year.
