The American Council of Life Insurers is asking a panel at the National Association of Insurance Commissioners to avoid imposing redundant disclosure requirements on variable annuity issuers.
Kelly Ireland, a senior counsel at the ACLI, Washington, has written to officials at the NAIC, Kansas City, Mo., to comment on proposed revisions to the NAIC Annuity Disclosure Model Regulation that the NAIC’s Annuity Disclosure Working Group circulated July 23.
Insurers that write variable annuities already must meet disclosure requirements set by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), Washington.
In the past, the NAIC disclosure model exempted variable annuities and other products registered with the SEC from additional disclosure requirements.
The ACLI would prefer to see the revised annuity disclosure model keep the exemption for SEC-registered annuities, but it understands that the NAIC wants to harmonize the revised disclosure model with the approach taken in the NAIC’s Suitability in Annuity Transactions Model Regulation, Ireland says.
The suitability model contains no exemption for registered annuities, but it creates a “safe harbor” for sales of annuities which comply with FINRA suitability rules, Ireland says.
“If the working group seeks to impose disclosure duties on insurers who sell variable annuities or other registered annuities, it is imperative that insurers be deemed to have satisfied their obligations with respect to annuity disclosure if it is already subject to the stringent disclosure requirements set by the SEC and FINRA,” Ireland says. “Any rule that imposes a greater burden on insurers without this ‘safe harbor’ would be a significant setback for variable annuity disclosure.”
Ireland also is asking for exemptions from illustration requirements for some products, such as registered annuities and small annuities.