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September 14, 2008 at 04:00 PM
The National Association of Fixed Annuities criticized the Securities and Exchange Commission last week for closing the comment period on a proposal that would impose federal regulation on fixed index annuities.
The letter came as part of a multi-pronged effort by life insurance industry interests to force the SEC and the Financial Industry Regulatory Agency to back off on their decision to oversee index annuities as securities.
For one thing, the National Association of Insurance and Financial Advisors sent out an alert to its members from its annual meeting in San Diego asking them to send letters en masse to the SEC asking the agency to withdraw the proposed rule.
And, in a letter sent in as the comment period closed, the Association for Advanced Life Underwriting questioned, among a multitude of concerns voiced about the proposal, whether the SEC and FINRA “really intended to encompass such a broad array of traditional annuity products within the rule.”
In NAFA’s letter, Malott Nyhart, its chairman, observed, “In light of the significant legal and economic policy issues at stake, we are extremely disappointed that the SEC chose to seek to move this rule to adoption with only a very narrow window for comment.”
He charged in his letter that the “proposal departs significantly from the SEC’s 1997 statement on fixed index insurance products.”
Moreover, Nyhart said, insurance companies have conducted their business in accordance with the release for more than a decade. “By not allowing a reasonable comment period, the SEC apparently discounted the reasoned views of numerous members of Congress, small businesspersons, and state regulatory officials who requested an extension.”
In addition, an extension would have permitted the industry to conduct economic studies of cost-benefit factors in the absence of SEC rigorous analysis of whether the proposed rule promotes efficiency, competition and capital formation which Congress requires of the SEC, he said.
He argued in his letter that fixed index annuities are useful to consumers because they help stabilize income by insuring consumer principal and accumulated minimum interest, while providing the potential for modest benefit from positive market changes.
