Iowa insurance regulators say they want to tighten oversight of index annuity products.
Regulators from the Iowa Insurance Division talked about the proposed changes here at the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo., during a joint meeting of the Market Regulation and Consumer Affairs Committee and the Life Insurance and Annuities Committee.
The Iowa division and the Minnesota Department of Commerce also sponsored an index annuity seminar here.
Regulators from the states noted that 67% of issuers of index annuities, or annuities with crediting rates pegged to the performance of stock indexes and other market indices, are from Iowa and Minnesota.
In Iowa, one key regulatory change could affect the name of the product: Iowa wants to require that the products, which often are called “equity-indexed annuities,” be referred to as “fixed index annuities” in all advertising and marketing materials, according to Jim Mumford, a first deputy commissioner with the Iowa division.
Here are some other steps that Iowa regulators have proposed:
- Promptly implementing the Senior Protection in Annuity Transactions model regulation and a model focusing on annuity disclosures.
- Setting a requirement that producers receive 4 hours of general index annuity training.
- Requiring that insurers provide company-specific training and updates on new products.
- Establishing a regulator training program.
- Updating the NAIC’s Buyers Guide to reflect changes in the index annuity market.
Linda Lanam, vice president-annuities with the American Council of Life Insurers, Washington, says the ACLI board is supportive of an extended suitability model and implementation of the annuity disclosure model.
Birny Birnbaum, executive director with the Center for Economic Justice, Austin, Texas, asked about the sudden interest in index annuities.
“What consumer complaints are causing you to want to take action?” Birnbaum asked.
Mumford said Iowa has received only 26 complaints concerning index annuities.
Jack Marrion, president of Advantage Compendium, St. Louis, talked at the index annuity seminar about index annuity commissions.
Reports of the 15% commission are greatly exaggerated, Marrion said. Only 3% of these products have double-digit commissions, with the majority in the 6% to 9% range, he said.