Iowa and Minnesota are moving ahead with efforts to impose tighter regulation on sales of equity-indexed annuities.
Regulators in those states already are developing EIA standards, and they are talking about enlisting 4 more states in the effort, according to Jim Mumford, first deputy commissioner at the Iowa Division of Insurance.
Carriers in Iowa and Minnesota account for 67% of EIA sales, and adding the 4 other states to the project would push the total to 87%, Mumford says.
Iowa and Minnesota launched their EIA oversight effort during the recent spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
EIAs are annuities that give an investor the ability both to earn fixed returns and to collect extra returns that are tied to gains in the performance of stock market indices.
Insurers say EIAs are fixed annuities, and some regulators have tried to support that view by requiring insurers to call the products “indexed annuities” or “fixed indexed annuities,” rather than “equity-indexed annuities.”
The National Association of Securities Dealers, Washington, has been investigating EIA sales practices and commission structures.
Regulators in Iowa and Minnesota are developing EIA guidelines based on proposed standards drafted by the Insurance Marketplace Standards Association, Bethesda, Md., Mumford says.