The New Jersey Department of Banking and Insurance approved new annuity consumer protections, making New Jersey the 50th state to adopt best-interest standards for annuities, according to the American Council of Life Insurers (ACLI).
The adoption of these standards across all 50 states is a significant development for consumers, ACLI president and CEO David Chavern said in a statement.
New Jersey’s newly approved standards incorporate elements of a model regulation from the National Association of Insurance Commissioners (NAIC) and align with best-interest regulations from the U.S. Securities and Exchange Commission (SEC), according to the ACLI.
The NAIC introduced the original model regulation in 2003, with multiple updates over the years. The most recent revisions occurred in 2020, when the model underwent substantial changes.
These revisions now require insurance producers and insurers to meet specific obligations related to care, disclosure, conflicts of interest, and documentation. The updated rules mandate that insurance professionals clearly disclose their role in the transaction, as well as details on compensation.
The goal of the model is to ensure that consumers fully understand the basis for recommendations made by insurance professionals, and how annuity products align with their financial needs and objectives. The updated model also aligns with the SEC’s 2019 Regulation Best Interest (Reg BI), which governs broker-dealer conduct.
While all 50 states have now adopted the best-interest standards, many states have implemented their own variations of the NAIC model. New York is an exception, with its own set of enhanced standards that do not follow the NAIC's framework.
As of early 2025, 47 states have adopted the NAIC's enhanced "best interest" standard, covering over 95% of the US population. These adoptions require producers to act in the best interest of consumers when recommending annuities, ensuring that the products align with the consumers' financial needs and objectives.
For instance, Florida revised its statutory framework effective Jan. 1, 2024, to incorporate these standards, emphasizing agent accountability and insurer oversight.
At the federal level, the US Department of Labor (DOL) introduced the Retirement Security Rule in April 2024, which expanded the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA). This rule aimed to ensure that financial professionals providing advice to retirement plan participants and IRA owners act in the clients' best interests.
However, the rule faced legal challenges, and in July 2024, a US judge blocked its implementation, citing conflicts with ERISA and deeming the rule arbitrary. The DOL has since sought additional time to determine its next steps in response to the litigation.
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