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June 17, 2010 at 08:00 PM
Members of the conference committee responsible for reconciling the House and Senate versions of H.R. 4173 have been looking at the indexed annuity jurisdiction issue.
Sen. Tom Harkin, D-Iowa, asked members of the conference committee to add an amendment to Title IX of the financial services bill that would classify fixed indexed annuities as insurance products — if the FIA products are sold by insurers domiciled in states that have adopted the model regulations recently developed by the National Association of Insurance Commissioners, Kansas City, Mo., or if the insurer selling an FIA product has agreed to apply the NAIC standards to all of its FIA sales.
The amendment would have no affect on the legal status of the FIA products not subject to the NAIC model rules.
The U.S. Securities and Exchange Commission has been trying implement Rule 151A, a regulation that would classify FIA products as securities and state that the SEC has the authority to share jurisdiction over the products with state insurance regulators.
Several large FIA issuers are based in Iowa.
When H.R. 4173 was on the Senate floor, Harkin tried to add an amendment defining FIA products as insurance products to the Senate version of the bill. Harkin needed the unanimous consent of the Senate to add the amendment, and Sen. Daniel Akaka, D-Hawaii, objected to the amendment, saying some residents of Hawaii had been hurt when they bought FIA products.
Harkin has tried to overcome colleagues’ objections by modifying his proposed amendment to add the requirement that FIA products regulated as insurance products be subject to NAIC standards.
In the past, some FIA buyers faced problems getting cash out, but the new NAIC rules have fixed those problems, Harkin said.
