Missouri Bill Gives Securities Regulator Authority Over Variable Products

Wilkerson says variable products already are regulated by the Securities and Exchange Commission, the National Association of Securities Dealers and state insurance departments. The bill, he continues, would create the potential for conflicting regulation and create unnecessary compliance costs.

There were no instances that were raised during the hearing that would suggest there is a need for additional regulation, he says.

But Randy McConnell, a spokesman for the Missouri insurance department, cites 3 recent examples in which variable annuities were sold to elderly clients who “will not see the light of day” when they would be eligible to take surrenders without penalty. In those 3 cases, a total of $300,000 was returned to those consumers, he says.

The bill would give the Secretary of State jurisdiction over the suitability of insurance while the insurance department would retain authority over products and agent oversight, he explains.

If the Secretary of State had jurisdiction to act on suitability matters, McConnell continues, then the insurance department could work with it and take action under its authority over agent licensing.

Lorie Smith, executive director with the Missouri Association of Insurance and Financial Advisors, Jefferson City, Mo., says a MAIFA representative testified that an agent currently has to show a broker-dealer that a product is suitable and that the bill would create an extra layer of regulation.

She notes, however, that MAIFA, the state chapter of the National Association of Insurance and Financial Advisors, has members who are on both sides of the issue.

A meeting with Hanaway and industry representatives is expected soon.

Reproduced from National Underwriter Edition, April 9, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.