The head of a major index annuity manufacturer says regulators have been hinting for years that they were going to turn their attention to index annuities.

Now that the U.S. Securities and Exchange Commission is starting to act, “I think there are too many folks acting like this is a surprise,” says Gary Bhojwani, chief executive of Allianz Life Insurance Company of North America, Golden Valley, Minn., a unit of Allianz S.E., Munich, Germany.

“I’m all for getting these issues out of the way sooner rather than later,” he says.

The SEC has developed a draft rule, Rule 151A under the federal Securities Act of 1933, that would define index annuities as securities rather than as insurance products.

The draft of the rule was approved for release June 25, and comments are due Sept. 10.

“We’re convinced the product is an insurance product, not a security,” Bhojwani says. “We think it’s a black and white issue.”

But, either way, index annuities should continue to have a bright future, because of demographic and other trends, he says.

Index annuities now account for about 10% of the $250 billion U.S. annuity market, and they still appear to have plenty of room to grow, Bhojwani says.

In addition to being a major player in the index annuity market, Allianz Life sells variable annuities, which already are regulated as securities.

Allianz Life is prepared to thrive, and help agents thrive, whatever the SEC decides about how to classify index annuities, Bhojwani says.

He sees the agent licensing issue as the most difficult index annuity matter before the SEC.

To Allianz Life, it seems to be clear that index annuities are insurance products, and it also seems clear that efforts to end problem sales practices are behind the times, Bhojwani says.

Because of federal investigations, legal settlements and general compliance concerns, most life insurers now have developed thorough programs for training and supervising agents, Bhojwani says.

In contrast, whether the SEC will require agents to have a full securities license, no license or some kind of simplified license before selling index annuities is difficult to predict, Bhojwani says.