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House Bill 79 — Annuity consumer protections act

House Bill 79 — Annuity consumer protections act

Wayne Hoffman
February 3, 2021

Bill Description: House Bill 79 would impose a series of government mandates regarding the issuance of annuities to consumers, as well as impose continuing education requirements on the private sector.

Rating: -3

Analyst Note: An annuity is one of many financial products available on the open market aimed at providing consumers with an income stream in retirement. There are different types of annuities, and as with other investment vehicles, they each come with myriad pros and cons, and no investment vehicle is without risk. In the 2020 legislative session, H 526 imposed consumer disclosure requirements for annuities. These disclosures are now being augmented by actual restrictions and conditions on the offering of annuities to consumers in Idaho, as well as other conditions for insurers and producers in the marketplace. 

It is said that this legislation would prevent preemption by the federal government, meaning agencies in Washington, D.C., would assume oversight over these matters. However, it is also arguable that the state should do more to object when the federal government occupies an area outside its constitutional responsibilities and subjects Idahoans to unnecessarily burdensome regulations and laws. Regardless, the Freedom Index examines legislation on its face as it applies to the growth and responsibility of state government, regardless of the intentions behind the legislation.

This legislation codifies some requirements for annuities that exist in the state’s administrative rules. However, the Freedom Index does not take this into account, as repealing a statute is much more challenging and more permanent than a regulation which can be eliminated by the action of either the Legislature or governor. 

Does it transfer a function of the private sector to the government? Examples include government ownership or control of any providers of goods or services such as the Land Board’s purchase of a self-storage facility, mandatory emissions testing, or pre-kindergarten. Conversely, does it eliminate a function of government or return a function of government to the private sector?

This bill would put the government in the middle of the decision making process of whether a consumer can be offered participation in an investment vehicle. While it may sound noble for the state to tell a producer (as it does in the proposed 41-1940A) that he shall “exercise reasonable diligence, care, and skill to know the consumer’s financial situation, insurance needs, and financial objectives,” the state now plays the part of second-guessing whether the producer has made the right choice. This legislation is filled with other examples in which the private sector would ordinarily weigh such issues on its own, but now the government gets to substitute its judgment for that of the private sector in the relationship with a client.


Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

While the state already regulates, to some extent, annuities, this proposal would vastly expand the state’s oversight, by strictly regulating whether an annuity can even be offered to a consumer, and the conditions under which an offer is made.


Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

The legislation calls for insurers and producers to participate in continuing education programs at the direction of the Department of Insurance. While the legislation is silent as to the cost of such continuing education programs, such programs usually carry a price borne by the trainees, and businesses must also absorb costs associated with participant downtime.


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