NU Online News Service, March 18, 2003, 5:24 p.m. EST — Atlanta
Insurers and producers urged state insurance regulators here at the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo., to oppose efforts to put variable products under the supervision of state securities regulators.
Insurance regulators said they might make a decision about the issue at the NAIC’s summer meeting, in June.
“Do you agree that variable annuities are securities?” Larry Mirel, the District of Columbia insurance commissioner, asked industry representatives.
Carl Wilkerson, chief counsel for securities and litigation with the American Council of Life Insurers, Washington, said that variable annuities are different from other types of securities.
A variable annuity is a hybrid product that is a security for purposes of federal regulation and an insurance product for purposes of state regulation, Wilkerson said.
Insurance departments have been very effective in regulating the product, Wilkerson added.
Industry representatives said that states do not have to subject the sales of variable products to state securities regulation because allegations about problems with VA sales practices are unrelated to the product’s hybrid status.
Some meeting participants argued that states ought to regulate variable annuities as securities because of the problems the NAIC is having with developing a model for ensuring that insurers and producers verify that the products they sell are suitable for the purchasers.
Securities regulators are making that argument in Kansas, in an effort to support a state bill that would give securities regulators joint jurisdiction with insurance regulators over variable products.