Key Issues for Fraternals at Summer NAIC Meeting: Annuity Sales Standard and Big Data
As I write this post, I am preparing to depart for the NAIC summer meeting in New York City. I’ll be joined at the meeting by attorneys from several Alliance member societies and literally hundreds of representatives from individual insurance companies and industry trade associations trying to make sure their voices are heard as regulators debate issues affecting all sectors of the business – life, health, property/casualty. My fraternal colleagues and I will make sure that the most significant NAIC Committee, Task Force, and Working Group meetings are covered and that the Alliance provides its members – particularly our small and mid-size members that don’t have the resources to stay on top of developments at the NAIC – with the information they need to know about regulatory changes that will affect them.
While no “fraternal specific” issues are on tap for the meeting, regulators will be discussing – and potentially acting on – a number of Model Acts that will impact our business operations. Of most significance are the issues that will be discussed within the framework of the Life Insurance and Annuities (A) Committee. These include:
- The (A) Committee will discuss issues revolving around the use of “big data” in underwriting. Technological advances from social media to genetic testing come into play here, along with consumer privacy issues. While no decisions are expected to be made at the August meeting, regulators are trying hard to keep pace with an environment that seems to be changing on an almost daily basis.
- The Annuity Suitability (A) Working Group will continue the months-long discussion or proposed revisions to the Annuity Suitability Regulation. One of the components of the debate will be whether to add “prudence” to the Model Act and finding a landing spot for the regulation between the current suitability standard and a full fiduciary standard that was contained in the Department of Labor’s original proposal in 2014. Regulators are also striving to ensure that the NAIC Model Act complements the recently issued SEC Best Interest Standard. The Alliance has not taken a policy position or issued comment letters on any of the proposals because this is not a “fraternal specific” issue. Moreover, most fraternals offer only plain vanilla fixed annuities, which may lessen their exposure to the Model Act’s provisions. Nonetheless, fraternals and their field representatives will be affected by the Model Act and the various tweaks that individual states make to it when it is enacted. That means the Alliance’s primary role is providing you the information you need to ensure that your society and field representatives are in full compliance with state statutes and regulations.
Look for a summary of the key actions taken by regulators at the NAIC meeting later this month.