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January 04, 2019 at 02:56 PM
While deregulation boosted annuity sales in 2018 and may lift long-term defined contribution sales, “re-regulation” of annuities via the Securities and Exchange Commission advice rules along with state fiduciary rules and an anticipated National Association of Insurance Commissioners’ annuity sales suitability framework could dampen VA sales, Credit Suisse analysts predict.
Despite some regulatory pressure and equity market sensitivity, an increased focus on retirement products could be beneficial for life insurers’ asset portfolios if it leads to more access to these products, according to a new Credit Suisse Report, titled “Life Does Not Appear To Be Dead.”
“Shifting regulation has driven strong annuity sales in 2018 year-to-date and could further boost retirement products and assets longer-term,” stated the report, released Wednesday and written by life insurance equity analysts led by Andrew Kligerman.
While the vacated Labor Department fiduciary standard is likely to boost long-term sales of defined contribution products, according to the sector forecast, the analysts see headwinds from equity market volatility and from potential regulation.
For instance, the analysts note state insurance departments’ activity to impose a fiduciary standard on the sale of annuities combined with the SEC proposed best-interest standard “could dampen sales,” according to the report.
Recent interest by Congress in the retirement savings planning arena could also bolster life insurers in the long term if legislation results in action that allows greater access to 401(k)s and other savings products by employees, according to the report.
The NAIC had been working on an annuity sales suitability framework and was attempting to coordinate with the SEC last year, but the new year, under new NAIC life insurance and annuities committee leadership, could hasten, change or halt the state-led process or keep it on course.
The new NAIC president, Maine Insurance Superintendent Eric Cioppa, is expected to appoint NAIC committee leadership at the annual winter commissioners meeting, which will be held in early February in California.
