Best’s Commentary: SECURE Act Offers Opportunities for Annuity Providers
July 11, 2019 by AM Best
Oldwick – AM Best believes that legislation to bolster retirement security that is making its way through Congress would expand market opportunities for the retirement and employee benefit segments of the U.S. life industry.
The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) recently passed in the U.S. House of Representatives and now heads to the Senate, which is considering a similar bill. The two bills, which have a number of very similar key provisions designed to promote retirement security in the United States, could offer broader market opportunities for in-plan annuities to the U.S. life/annuity segment and spur expansion of 401k plans in the smaller employer markets.
In a new Best’s Commentary, titled, “SECURE Act Offers Opportunities for Annuity Providers,” AM Best states that the relaxation of fiduciary standards in both bills represents an opportunity for U.S. life insurers. In particular, a safe harbor provision would allow plan sponsors to select insurers to provide guaranteed income solutions, and then protect those sponsors from liability should participants or their beneficiaries suffer losses due to the insurer’s inability to satisfy its financial obligations under the contract terms.
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