Is the SEC’s offer to delay implementation of Rule 151A by a couple of years good news, or bad news?
Well, it depends on how you look at it.
On the one hand, regulators would have more time to determine how the rule, which would regulate indexed annuities as securities at the federal level, would impact the industry and the economy. As part of its proposed two-year stay, the SEC would open up a comment period designed to find out just what type of a longstanding impact such a rule would have.
Any delay for the rule — which was originally set to take effect in January 2011 — would also give indexed annuity issuers more time to implement the rule and adjust, should the commission actually go through with things (and should the courts allow them to).
But as with many decisions, this one cuts both ways. It’s clear the SEC isn’t ready to give up yet, as American Equity Investment Life Insurance Co., Midland National Life Insurance Co., and other insurers may have hoped when they filed a lawsuit back in January to keep the regulator from moving forward with the approved rule.
In fact, NAFA (the National Association of Fixed Annuities) is warning people not to sit back and relax just because there may now be a longer timeframe.
Perhaps the SEC is hoping that the industry will give up after a period of time. That’s pretty unlikely, however, with a rule such as 151A having so many potentially devastating consequences for brokers and agents and carriers alike.
There’s no telling at this point – the courts may throw out the rule. Or, talks with the NAIC to strengthen state oversight of indexed annuity sales may urge the SEC to give up the fight. Or, the rule could go ahead as planned, just not until 2012 or 2013 or 20-whenever.
Any movement can be construed as good movement in this power struggle. For now, however, it’s business as usual… until the next unexpected move.
Christina Pellett is the editor of the Agent’s Sales Journal.