The National Association of Insurance and Financial Advisors says it will fight efforts by the U.S. Securities and Exchange Commission to classify indexed annuities as securities.
If the SEC is successful, it would end up helping to regulate the indexed annuity market.
“In our view, [indexed annuity] products do not meet the test for determining whether a product is a ‘security’,” NAIFA President Jeffrey Taggart says in an announcement of the NAIFA board’s decision to oppose the SEC indexed annuity proposal, which was released in June.
“Unlike the case with investment products such as mutual funds and individual stocks, with an indexed annuity the investment risk of a downturn in the related index rests with the issuer of the product, not the consumer,” Taggart says.
The policy formation subcommittee at NAIFA, Falls Church, Va., recommended that the NAIFA board oppose the SEC proposal. Members of the NAIFA board accepted the recommendation Thursday.
Taggart says NAIFA believes that the current state system for regulating the indexed annuity market is the appropriate means for addressing the concerns raised by the SEC.
NAIFA is committed to working with the National Association of Insurance Commissioners, Kansas City, Mo., and state insurance departments towards the goal of having every state “adopt and vigorously enforce” the NAIC’s model regulations on annuity suitability and disclosure, Taggart says.
NAIFA is recommending that state insurance regulators prevent the marketing of inappropriate indexed annuity products by developing and implementing new product design standards, Taggart says.