By Linda Koco
A Utah house bill involving index annuity sales met with strong insurance industry opposition recently and was subsequently tabled.
Introduced by Rep. Merlynn T. Newbold, (R), H.B. 277 seeks to require persons selling index annuities to hold a license from the National Association of Securities Dealers.
Currently, agents and brokers in all states must be insurance licensed to sell index annuities, not securities licensed. That is because states have treated index products as a variation of traditional fixed annuities, since both guarantee a minimum interest rate. (Note: The products differ in how they credit interest. Index annuities link interest to gains in a specified market index, while traditional annuities offer a stated interest rate.)
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The proposed bill would change Utahs licensure requirement by modifying the Utah insurance code to say: “Before a person may sell, solicit or negotiate an indexed annuity, that person must meet the same licensing requirements described in Subsection (1) for a variable contracts line of authority.”
At least 20 industry executives recently attended a Utah House Business and Labor Committee hearing on the bill to object to this change, sources say.
When the chair asked if anyone opposes the bill, 20 hands reportedly shot up, and then 3 of the 20 were allowed to speak. Other insurance professionals circulated documents in support of their opposition to the measure.