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Regulatory

Understand Today's Environment

Multiple Best Interest rules or standards have been proposed or passed into law recently by the Securities and Exchange Commission (SEC), National Association of Insurance Commissioners (NAIC), and some individual states. These fiduciary standards with varied jurisdictions are likely to bring significant change and complexities to consumers, financial professionals, and the industry. We provide information to help you understand these developments and their implications.

Best Interest/Fiduciary

NY Regulation 187

With the DOL Fiduciary Rule vacated by the 5th circuit court of appeals in 2018, the industry's intense fiduciary focus has shifted to state regulators. Of particular impact to the life and annuity industry is the New York Department of Financial Services (DFS) amendment to Regulation 187, renamed, “Suitability and Best Interests in Life Insurance and Annuity Transactions” regulation.

Other State Initiatives

With the DOL Fiduciary rule having been vacated by the 5th circuit court of appeals in 2018, the intense focus across the industry on the federal fiduciary rule has now shifted to state regulators threatening a Potpourri of legislation across the states. The states of New York, Nevada and Connecticut have already passed Best interest laws. Others, including New Jersey, Massachusetts, and Illinois have proposed new legislation.

SEC Best Interest

ON June 5th 2019, the Securities and Exchange Commission adopted a new rule establishing a standard of conduct for broker-dealers when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities (“Regulation Best Interest”). Regulation Best Interest enhances the broker-dealer standard of conduct beyond existing suitability obligations, and aligns the standard of conduct with retail customers’ reasonable expectations.

NAIC Annuity Suitability

The Suitability in Annuity Transactions Model Regulation require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transactions involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.

Workplace Retirement Initiatives

DOL Rules on ARPs

The U.S. Department of Labor (DOL) has released a final ruling, to be effective September 30, regarding association retirement plans (ARPs). This will allow small businesses to join together to provide their employees defined benefit retirement plans. (More)

DOL Issues Final PTE for Auto Portability

July 31st the U.S. Department of Labor (DOL) released the final Prohibited Transaction Exemption (PTE) to Retirement Clearinghouse (RCH) for the RCH Auto Portability program, completing the regulatory framework required for its adoption. (More)

What We're Hearing

LIMRA's Collection of Curated Third-Party Content

The Final Reg BI Package: What to Know and What’s Next

Drinker Biddle, June 12, 2019

The SEC’s New Standard of Conduct Rules – Application to Retirement Accounts

Eversheds Sutherland, August 12, 2019

Emerging Fiduciary Patchwork Chart

Eversheds Sutherland, August 14, 2019

Best Interest Standards by Eversheds Sunderland

By Susan S. Krawczyk Partner, Eversheds Sunderland and Cynthia R. Shoss Partner and Co-Head of Global Insurance, Eversheds Sunderland

Time to Start Again: Preliminary Views on Regulation Best Interest

Oliver Wyman, 2019

Upcoming Related Events

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Related On-Demand Webinars

NY Reg 187 for Life Insurance: Need Some Guidance?

Best Interest is coming to life insurance. Learn how your company can address Reg 187.

SEC Best Interest Interplay with DOL: What Will Compliance Look Like?

Join LIMRA as we interview subject matter expert Joshua Waldbeser of Drinker Biddle on the new implications of SEC BI and current consensus expectations of the DOL's rulemaking.

The SECURE Act of 2019: Significant Retirement Reform Legislation Appears Likely

Join us on Wednesday, July 10, 2019 at 12:00 p.m. EST to learn about these looming changes and the impact they are likely to have on retirement plan and IRA service providers nationwide.

SEC's Regulation Best Interest and RIA Interpretation: Impact on Plans, Participants and Rollovers

The SEC's proposed Best Interest Regulation applies to recommendations to participants, including rollovers, but apparently does not apply to advice to plans.

Looking Ahead to Best Interest Standards for Life and Annuity Sales

This webinar, the first of two parts, will discuss the new “best interest" standard and related supervision requirements for insurers and intermediaries operating in New York under Amendment No. 1 to New York Insurance Regulation 187.

Looking Ahead to Best Interest Standards for Life and Annuity Sales - Part II

This webinar, the second of two parts, will expand the discussion of enhanced standards of care and related supervision requirements emerging at the state and federal levels.