Industry Fights Push To Put VAs Under State Securities Regulators Oversight
Insurers and producers are saying variable contracts are well-served with insurance departments overseeing regulation of these products. But as regulators at the summer meeting of the National Association of Insurance Commissioners here heard, there are others who say variable contract sales practices should come under the purview of state securities regulators.
Counted among that number are the North American Securities Administrators Association, the National Association of Securities Dealers, and the Consumer Federation of America, all in Washington; and the Financial Planning Association, Atlanta.
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Those who favor keeping sales practices oversight in the camp of insurance regulators include the American Council of Life Insurers, Washington; and the National Association of Insurance and Financial Advisors, Falls Church, Va.
During the summer meeting, the ACLI asked the NAIC to write a letter in support of retaining authority for variable contracts with state insurance departments. A group called the National Conference of Commissioners on Uniform States Laws, Chicago, is set to vote on the issue with its new version of the Uniform Securities Act at the end of July.
Should the new version of the Act be adopted, state legislatures could then take the model and enact it in their states.
Despite ACLIs assertion that immediate NAIC action was needed, regulators said they were not familiar with the issue and would have to look at it before deciding on whether or not to weigh in.
Carl Wilkerson, ACLI chief counsel-securities and litigation, said, “It is incomprehensible that a body of state insurance regulators would stand by and allow them [securities regulators] to take exclusive state jurisdiction and not say anything about it.”
Wilkerson said he understands that insurance regulators want to go through the proper procedures, but added, “someone is trying to eat their lunch.”
Forty-eight state insurance departments have exclusive jurisdiction over variable contracts, he said, and giving securities regulators oversight over the product would create “statutory conflict.”