New Jersey Adopt Best-Interest Annuity Standards as 50th State

New Jersey has become the 50th state to adopt best-interest standards for annuities, completing nationwide implementation of these consumer protection measures. The New Jersey Department of Banking and Insurance approved regulations aligned with a National Association of Insurance Commissioners (NAIC) model rule and the U.S. Securities and Exchange Commission's Regulation Best Interest (Reg BI). The NAIC first introduced its annuity best-interest model regulation in 2003 and updated it significantly in 2020 to enhance obligations for insurance producers and insurers regarding care, disclosure, conflicts of interest, and documentation. These requirements aim to ensure consumers receive clear information about how annuity recommendations match their financial goals and the compensation of the insurance professional.

While the majority of states, including New Jersey, have adopted the NAIC model or similar standards, New York maintains its own enhanced regulatory framework outside the NAIC guidelines. As of early 2025, 47 states cover over 95% of the U.S. population with these protection rules. States like Florida have recently updated their laws to emphasize agent accountability and insurer oversight under this framework.

At the federal level, the Department of Labor (DOL) advanced the Retirement Security Rule in April 2024, expanding the definition of investment advice fiduciaries under ERISA to reinforce best-interest obligations for retirement plan and IRA advice. However, legal challenges pushed back the rule's implementation, with a court ruling in July 2024 blocking it over conflicts with existing ERISA provisions. The DOL is reconsidering its approach amidst ongoing litigation.

This comprehensive move towards standardized best-interest requirements for annuities reflects the industry’s evolving regulatory landscape focused on transparency, consumer protection, and alignment of advice with client needs across state and federal levels. Insurance professionals now operate under clearer expectations that balance regulatory oversight and obligation to act in clients' financial best interests.