Discover new laws regulating insurance products and how it affects you.

Industry lobbyists are at work tracking regulatory and legislative efforts threatening to substantially change the sale of insurance products. These new laws regulating insurance products could affect your insurance sales

New insurance regulations could include:

• The Securities and Exchange Commission approved Regulation Best Interest, a standard of conduct for brokers, by a 3-1 vote.
• Two National Association of Insurance Commissioners’ working groups are inching toward changes to rein in illustrations.
• A Senate bill would require health benefits brokers to disclose their commissions and other incentives they receive.

Let’s dive deeper into the proposed insurance regulations to discover how they’ll impact you.

1. Securities and Exchange Regulation Best Interest

The Regulation Best Interest, is a three-part rule that aims to establish a standard of conduct for insurance brokers and dealers. According to the SEC, the goal is to better protect investors.

This newly adopted insurance regulation comes just a year after the Department of Labor’s fiduciary rule was vacated.

The final draft of the rule is 771 pages full of precedence, interpretation and justification for omissions and changes.

SEC Regulation Best Interest Summary:

• Despite the title, there is no definition of the phrase “best interest” in the rule.
• A section to restrict the use of adviser/advisor by insurance sellers was dropped.
• The rule maintains separate standards for investment advisors and insurance brokers and dealers.

The SEC did not comment as to whether the new Regulation Best Interest Rule would replace those fiduciary rules established by state legislatures. For now, judicial proceedings will determine the future of current state laws.

Insurance agents worries about transition to the new Regulation Best Interest rule, the SEC will establish committees to assist insurance companies with the implementation of the new rules, according to SEC Chairman Jay Clayton.

2. Changes to Insurance Illustrations

AG 49 was created to provide insurance carriers with a more uniform method for calculating maximum illustrated rates on IUL products and to assist consumers in understanding indexed life insurance product illustrations.

The annuity Disclosure Working Group is concerned that consumers are being misled by unrealistic indexed annuity illustrations. They are studying a proposal to double the life of indexes to be used in annuity illustrations from 10 to 20 years.

Insurance industry representatives believe the 20-year requirement would eliminate approximately 70 percent of the indexes being used.

3. Health Benefits Brokers to Disclose Commissions and Incentives

Health insurance brokers have seen a drop in commissions ever since the Affordable Care Act. Still, senators want to include a provision to require health benefits brokers to disclose their commissions and incentives they receive from the insurance industry.

The bill hopes to put a stop to surprise medical bills, high drug prices and public health problems. The bill will also require that health benefits brokers reveal fees and other enticements they receive from the insurance industry.

“Lowering health care costs is what we want for our clients. But how can anybody point the arrow toward our members and say we’re part of the problem?” said Ronnell Nolan, CEO of Health Agents for America.” She says, “We’re not part of the problem. Agents have been losing money since the passage of the ACA.”

Insurance broker commissions make up about 5 percent of insurance carriers’ total spending before the Affordable Care Act.

How do you feel about these new laws regulating insurance products and how agents do business? How will you be affected?