Iowa insurance regulators want a “let us know” early warning system from the Insurance Marketplace Standards Association, Bethesda, Md., as it develops standards for index annuity products, according to Jim Mumford, first deputy commissioner with the Iowa insurance department.
IMSA, a life insurance standard setting and certification organization, says that it can help the department as it advances plans to scrutinize fixed index annuities, also known in the market as EIAs.
During the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo., Iowa announced an initiative to increase oversight of the product. The announcement followed a public hearing held by the Iowa and Minnesota insurance departments (see NU, March 13).
Notification should be “immediate” if IMSA is conducting a certification examination and something is uncovered, says Mumford. This would allow the department to consider action including a market conduct examination, he adds.
The index product is a good starting point to see if the IMSA program could help regulators, Mumford says. If it proved successful, it could conceivably be used more broadly with other products, he adds.
Mumford also notes that to date, the department has not seen that many complaints about the fixed index annuity, and companies seem to have their own standards in place to detect problems.
Brian Atchinson, IMSA president and CEO, says that most companies do have protocols in place to detect sales problems.
But, when IMSA meets with regulators later in March, he says that everything from consistent disclosure to training will be discussed. If discussions are successful, the program’s standards might possibly be extended to other products, he says. But Atchinson adds he wants to focus on the fixed index product first.