Sales of indexed annuities could fall sharply if the U.S. Securities and Exchange Commission adopts a recently proposed rule classifying the annuities as securities.
Consultants at TowerGroup Inc., Needham, Mass., make that prediction in an analysis of the SEC Rule 151A proposal, which was released in June.
Because licensing requirements for sellers of securities are different than the requirements for sellers of insurance products, adoption of Rule 151A would force many insurance agents out of the indexed annuity business, TowerGroup consultants predict.
The consultants believe, however, that Rule 151A ultimately would help the insurance industry by increasing the likelihood that consumers would end up with suitable products.
Although some insurance agents might stop selling indexed annuities if Rule 151A is adopted, broker-dealer firms and insurers would find new indexed annuity sales opportunities if the SEC would clarify the annuities regulatory status, the consultants predict.
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