FACC, the Federation of Americans for Consumer Choice, fully supports the efforts of West Virginia to adopt the updated NAIC Model regulation #275. We appreciate that West Virginia has proposed adopting the model regulation in full to enhance consumer protection and promote uniformity.
The Honorable Mac Warner
Office of West Virginia Secretary of State
Administrative Law Division
Attn: Erin K. Hunter via
email erin.k.hunter@wv.gov
Re: Suitability in Annuity
Transactions W. Va. Code §§33-2-10 and 33-11-6
FACC, the Federation of Americans for Consumer Choice, fully supports the efforts of West Virginia to adopt the updated NAIC Model regulation #275. We appreciate that West Virginia has proposed adopting the model regulation in full to enhance consumer protection and promote uniformity.
However, we note that there is an accompanying Statement of Circumstances which we think contains certain information that could be improved for clarity. If the Statement of Circumstances is still open to editing for purposes of the record, we would suggest two small changes.
First, the statement about the Harkin Amendment suggests adoption is needed to avoid federal preemption, but to be more precise, failure to adopt the model regulation would mean that annuities sold in West Virginia could become subject to federal regulation such that there would be dual regulation. We suggest it say: “If West Virginia does not adopt the updates to Model Regulation #275, the regulation of fixed and fixed indexed annuities in West Virginia may be subject to preempted by federal securities laws regulation.”
Second, the statement saying the NAIC model “also incorporates a best interest standard” could create the wrong impression that NAIC model requirements are the same as SEC requirements, when there are differences appropriate to the different products and distribution systems. The NAIC has used the word “compatible” to convey they are similar but not the same. It might be helpful to make the following edit: “The 2020 NAIC Model Regulation #275 also incorporates contains a compatible best interest standard that requires all recommendations by insurance agents and carriers to be in the best interests of the consumer and that consideration of the consumers interest must always be placed ahead of any financial interest that the agent or carrier may have in the transaction.”
We recognize these are somewhat minor technical changes but wanted to offer them just to create the proper underlying record. We also recognize that the Statement of Circumstances at this point may no longer be editable in which case we understand if these suggestions are not able to be considered.
In any event we appreciate the opportunity to comment and again thank the Department for proceeding with this regulation.
Sincerely,
Kim O’Brien, CEO