Iowa insurance regulators are joining with several industry trade groups in a pilot project designed to help consumers wade through the complexities of the fixed and index annuities they are buying.

The Iowa Insurance Division said last week it is joining the American Council of Life Insurers and the National Association of Fixed Annuities to promote use of an annuity disclosure template developed by the ACLI and the Association for Insured Retirement Solutions, Reston, Va.

At issue is a huge market. For example, in 2006 alone, $25.3 billion worth of index annuities alone were sold, according to Sheryl Moore, head of Advantage Group Associates, Inc., Pleasant Hill, Iowa, which maintains a website that tracks index-annuity sales.

Through the third quarter of 2007, actual sales of index annuities were $18.8 billion, according to Moore.

Preliminary data indicates projected sales of $25.1 billion 2007, Moore said. Sales dropped from the prior year because declining interest rates made the product less attractive to yield-hungry customers, she said. The interest rate environment was particularly challenging in the last half of 2007, Moore added.

According to Iowa regulators and the ACLI, participating insurers will use the standard disclosure document for one year in marketing fixed annuities and index annuities to evaluate how well consumers like the document and how well they understand the disclosures.

The template will not be used in marketing of variable annuities. The ACLI and NAVA also plan to expand the initiative into this product, according to Frank Keating, president of the ACLI.

The trade groups are continuing to work with the Securities and Exchange Commission and the Financial Industry Regulatory Authority to achieve regulatory acceptance of the variable annuity disclosure template in connection with federal disclosure and sales practice standards, he said.

“Consumers and regulators want clear explanations about annuity contract benefits, costs and features,” Keating said. “We do too. So we boiled down the legalese in annuity contracts and present it in an easy-to-read format.”

Keating added that consumers will be able to more easily know and understand exactly what they are getting when they purchase these annuity products.

NAFA also said it is supporting the program. Ann Black, a partner at Jorden Burt in Miami, said NAFA is also encouraging other state insurance departments to follow Iowa in adopting the annuity template.

Black explained that Iowa tends to take the lead on compliance issues, noting that Iowa regulators also led the initiative to have agents get four hours of training in selling annuity products.

The ACLI and the AIRS developed the standard document to help implement the annuity disclosure model regulation developed by the National Association of Insurance Commissioners, Kansas City, Mo.

Iowa and 13 states have adopted the model law.

The pilot disclosure program started Jan. 31, but officials note that some insurers will not be able to use the standard disclosure document until they convert their computer systems to handle it.

Other state insurance departments say they might join the initiative, Iowa officials report.

Iowa regulators are taking the lead because most of the estimated 60 companies that underwrite equity-index annuities and similar annuities maintain offices in Des Moines. For equity-index products, the largest marketer of the product is Allianz U.S., she said.

Member companies of the ACLI which have agreed to participate in this initiative include Transamerica Life Insurance Company; Life Investors Insurance Company of America; Transamerica Occidental Life Insurance Company; AXA Equitable Life Insurance Company; Genworth Financial; Hartford Life Insurance Company; ING Life Insurance & Annuity Company; Lincoln Financial Group; MetLife; Western & Southern Life Insurance Company; AAA Life Insurance Company; CUNA Mutual Group; Homesteaders Life Company; Principal Financial Group; Thrivent Financial for Lutherans; and John Hancock.