August 28, 2008
I encourage you to abandon the Proposed Rule 151A. Please allow more time for the insurance companies to comment.
I am a health and life insurance broker and have been following the news concerning this proposed rule. I believe it would harm the very clientele that I help.
My business is mainly health insurance for self-employed people. I also offer retirement savings via equity indexed universal life insurance and fixed annuities as an extra service.
I ask folks what they are doing to save for retirement and most have saved very little. Those who have some savings have put it in mutual funds that have performed poorly over the last several years dating back to the dot-com bust. But for a very few, they have neither investment ability nor can they stomach investment risk. That’s why they like fixed annuities that by definition are savings plans and not investments because there is no risk and the potential for returns that rise in proportion to the S&P 500.
Requiring me to get a security license would neither help these people nor protect them. Annuity sales are already heavily regulated here in California with safeguards against abuse. We have periodic CE courses and frequent updates by the insurance companies. We have to ensure and document the appropriateness of the annuity we recommend.
I have read several articles in the Wall Street Journal advocating the proposed rule generally denouncing sales of fixed annuities by insurance agents. And, they misleadingly call fixed annuities investments which they are not as there is no investment downside risk. These articles appear to be intended to steer the business to security dealers. The proposed rule would eliminate competition and hurt consumers.
Fixed annuities should not be regulated like variable annuities. Doing so would confuse the public. It does not make sense for annuities that have no market related downside risk to the consumer to be treated as securities.
Everett W. Knell
HealthPlans4Less