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June 29, 2018

Carrier Regulatory Mid-Year Update

By: Jennifer Middlin

At the beginning of each year Vertafore and SILA partner to bring you the Running Start Webinar series, for compliance information you need to gain an edge and hit the ground running. You can watch the on-demand webinar here.

This is a great source of information for anyone in compliance. However, the world moves quickly, so Vertafore is bringing you a recap of the regulatory changes we cover in the Running Start as well as some updates to recent changes in compliance.

  1. First is the Department of Labor Fiduciary Rule. The initial portion of the DOL Fiduciary Rule was implemented on June 9, 2017. The remaining provisions related to the Best Interest Contract Exemption were originally set to be implemented by January 1, 2018. However, these remaining provisions were delayed until July 1, 2019. Since the Fiduciary Rule was originally developed, a new Secretary of Labor has been named, Alexander Acosta, and a new SEC Commission Chair has been named, Jay Clayton. Given these changes in leadership, SILA will be monitoring any reforms to the Fiduciary Rule or any Fiduciary standards that may be adopted by the SEC. SILA will also monitor and keep members informed of any fiduciary standards that may be recommended by the NAIC or adopted by individual states. UPDATE - on March 15th, the 5th Circuit Court overturned the DOL rule with a 2-1 decision. On June 21st, the rule was officially laid to rest with the final mandate being issued to certify the decision. The SEC will now be in the driver's seat when it comes to any issuance of any new conflict of interest regulations that could impact the retirement planning marketplace.

  2. Affordable Care Act reforms. Since its inception in 2010, there have been various attempts to repeal and/or replace the Affordable Care Act. In 2017, there were several attempts by the Republican controlled House of Representatives and Senate to repeal and replace the ACA. None of these attempts were completely successful. We'll continue to monitor any developments on this front in 2018.

  3. NARAB On January 12, 2015, the National Association of Registered Agents and Brokers Reform Act of 2015 (NARAB II) was enacted as part of the Terrorism Risk Insurance Program Reauthorization Act of 2015. The industry has long sought uniformity for multistate licensing and NARAB is designed to implement a national standard for nonresident licensing while maintaining a home state's authority in resident licensing.

    Since this act was passed and signed into law, the challenge has been establishing the 13-member Board of Directors that will oversee the administration of NARAB. President Obama nominated individuals to 10 of the 13 Board of Director positions, however, the Senate Banking Committee did not act on the nominations and NARAB has not become operational. President Trump may re-nominate the original nominees to serve on the Board or he may nominate new individuals. Preparation activities for NARAB nominations are happening but no one has officially been nominated by President Trump yet.

  4. CLAIM Act (Adjuster versions) The CLAIM Act, HR 3363, which stands for?"Claims Licensing Advancement for Interstate Matters Act", was reintroduced into the House of Representatives for the third time in July of 2017. This bill would push the 34 states currently licensing independent insurance adjusters to establish uniform and reciprocal laws within four years. The bill requires states to have a uniform set of licensing, ethics and continuing education requirements for independent adjusters. In its current form, it is not supported by the NAIC.

  5. Treasury Report - Asset Management and Insurance Last is an interesting report that was issued by the Treasury Department in late 2017 in response to a Presidential Executive Order on Core Principles for Regulating the United States Financial System. The Treasury Department's review of the regulatory framework for both asset management and insurance firms identified significant opportunities for reform consistent with the core principles outlined in the Executive Order. There are several recommendations from the Treasury report that may be of interest to compliance professionals in our industry.

    • The Treasury supports current efforts at the DOL to re-examine the implications of the Fiduciary Rule. Treasury believes it is appropriate to delay full implementation of the Fiduciary Rule until the relevant issues, including costs of the rule and exemptions, are evaluated and addressed to best serve investors, and believes that such assessment and resolution of standard of conduct issues should include participation by the SEC and other regulators.

    • The Treasury believes the SEC and the DOL should work together to address standards of conduct for financial professionals who provide investment advice to IRA and non-IRA accounts.

    • The Treasury recommends the DOL and the SEC engage with state insurance regulators regarding impact of the standards of care on the annuities market.

    • The Treasury will take steps to expeditiously recommend nominees for the Board of Directors of NARAB II to President Trump who can be sent to the Senate for confirmation.

    • The Treasury encourages state regulators and the NAIC to assess how to increase the efficiency and uniformity of the producer appointment process.

    • Finally, the Treasury encourages all states to adopt the PLMA and encourages regulators to interpret appointment provisions of the PLMA consistently.

  6. The National Flood Insurance Program, which has been extended multiple times, is scheduled to expire on July 31, 2018. Another 6-month extension of NFIP was just added to a pending farm bill today. It is scheduled for a vote on June 28, 2018.

As you can see, there are a whole host of regulatory hot topics that the SILA Regulatory Impacts group will be keeping an eye on in 2018. So, how can you keep up.

Sircon helps you stay up-to-date on compliance changes and ensure that your producers are properly authorized. If you're not using automation to improve PLM, your organization is missing opportunities to increase efficiencies, reduce costs and improve the agent experience to boost competitiveness. Our customers are 6x more likely to rate their current practices and processes as leading edge in the ever-changing world of compliance. Lay a solid foundation for your future by reading the 5-Step Journey to Smarter Producer Lifecycle Management to learn how!


Jennifer Middlin

Jennifer Middlin is a Product Marketing Manager at Vertafore, where she works on Vertafore solutions for carriers and MGAs. She is an avid reader and news junkie outside of work, but enjoys free time with her kids the most.