Regulators discussing the proper annuity nonforfeiture rate were challenged by one of their own to put that issue aside and concentrate on the sale of annuities with high surrender charges.
During a discussion of the Annuity Nonforfeiture model regulation at the summer meeting of the National Association of Insurance Commissioners here, Utah regulator Tomasz Serbinowski said regulators should be looking at the sale of annuities with an initial 20% bonus and a 25% surrender charge rather than at a minimum nonforfeiture rate.
“I don’t believe consumers are really served by that charge,” he said. “A major consumer protection should be controlling and limiting surrender charges.”
His remarks followed a debate over whether to scrap an index rate in favor of a single interest rate and what that interest rate should be. A motion made to effect that change failed by a vote of 6-5, with 3 abstentions.
Serbinowski noted that the change to the Standard Nonforfeiture Law for Individual Deferred Annuities was enacted by the NAIC two years ago in March and “we are still debating the model regulation. We struggle in Utah with insurers trying to guess which way this may go.”