Regulation of EIAs
This week's edition of Investment News has two articles on the SEC move to regulate equity-indexed annuities (EIAs). In addition, comments continue to come in on the SEC's website.
In Sara Hansard's July 14 article in Investment News: State insurance regulators are angry about EIA proposal, she reports that Susan Voss, Iowa's Insurance Commissioner is scheduled to meet with SEC Chairman Christopher Cox tomorrow to address her concerns. The SEC's proposed regulation, in a reversal of their 1997 determination that EIAs were insurance products, would regulate EIAs as securities, with the requirement of prospectuses and other federally-mandated disclosures. In the same July 14 edition, Darla Mercado reports on Agents' concerns over the move by the SEC.
That agent concern is certainly evident on the SEC's website where over 50 comments were posted on one day alone last week. Many of those comments appear to be somewhat emotional reactions and I am hopeful that as we get closer to the deadline for input, there will be comments that reflect well-reasoned positions on the issues raised by this move. The Hansard article indicates that SEC spokesman John Nester stated, via e-mail, that SEC officials "look forward to hearing and considering all views" as the review the proposal. It also reports that several organizations, including ACLI and NAVA, are still evaluating the proposal.
Mercado reports that agents are concerned about having to affiliate with a broker-dealer and the resulting costs and loss of control they would experience in order to sell EIAs. Registered reps counter that federal oversight will improve sales standards.
State regulators are pointing to the new suitability model regulation as a more appropriate vehicle to safeguard insurance consumers.
