The controversial proposal would move most EIAs from the status of insurance products, which are regulated only by states, to that of securities, which are federally regulated.
A proposal to regulate equity index annuities as securities is likely to be approved by the Securities and Exchange Commission, an insurance regulator said today.
“I see this as moving through the SEC at some level,” Wisconsin Insurance Commissioner Sean Dilweg told more than 200 attendees at a conference in Washington on life insurance products sponsored by the American Law Institute-American Bar Association of Philadelphia.
The controversial proposal would move most EIAs from the status of insurance products, which are regulated only by states, to that of securities, which are federally regulated.
After receiving more than 2,000 comments on the proposal, the SEC extended the public comment period for it to Nov. 17.
“My approach on the regulation of fixed indexed annuities [is that] we [can] work with the SEC and the commissioners,” said Mr. Dilweg, a keynote speaker at the conference.
“What I don’t want to see is a duplicate bureaucracy that makes oversight regulation harder,” he said. Mr. Dilweg is also vice chairman of the life insurance and annuities committee of the National Association of Insurance Commissioners of Kansas City, Mo.
But Mr. Dilweg said that there is an opportunity to protect consumers and provide regulation of the whole nation. “We currently only have 30-some states with existing suitability laws in place” concerning equity index annuities, he said.
Wendy Carlson, general counsel and CFO of American Equity Investment Life Holding Co. of West Des Moines, Iowa, one of the top EIA issuers in the U.S., took issue with SEC arguments that such annuities are securities similar to variable annuities and that consumers need more protection from federal regulators.
EIAs are guaranteed insurance products that ought to be regulated by states as insurance, she said.
“All you need to do to understand the difference between an indexed product and a variable product is to look at the performance of those products in today’s world,” she said.
An EIA worth $100,000 last June would still be worth that amount today, while $100,000 in a variable annuity or mutual fund based on the Standard & Poor’s 500 stock index would have declined to $50,000 to $60,000 during that time, Ms. Carlson said.
