Washington Rule Regarding Best Interest Standard for Annuities

WA | The Insurance Commissioner is adopting rules related to the implementation of Chapter 64, Laws of 2023. HB 1120 (2023-24) concerning the best interest standard for annuity transactions passed in Washington’s 68th Legislative Session. This legislation transitions Washington from a suitability standard for annuity transactions to a best interest threshold and aligns with updates the National Association of Insurance Commissioners (NAIC) made to Model Regulation # 275. The new law requires producers, and insurers where no producer is involved, to act in the best interests of their consumers when recommending annuities, complete annuity specific training, and to establish and maintain recommendation supervision systems that ensure the insurance needs and financial objectives of consumers are effectively addressed.

This rulemaking will align the regulations in the Washington Administrative Code with the new provisions provided by Chapter 64, Laws of 2023, and the updated NAIC Model Regulation # 275. This alignment of authorities requires rulemaking to amend training requirements, revise the prior ‘suitability standard’ with the new ‘best interest’ threshold, and update terminology.

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