November 17, 2008
To Whom It May Concern:
I am writing to object to the adoption of Proposed Rule 151A. I am a Shareholder, Director and Vice President of M&O Marketing, Inc., a national field marketing organization in the annuity and insurance business. M&O works with approximately 50 insurance companies and thousands of independent insurance producers and financial planners throughout the United States. I personally have worked in the insurance industry since 1979. Our company is a member of NAFA, NAILBA, NAHU, FPA and NAIFA.
I oppose adoption of the Proposed Rule for several reasons. First, there has been no widespread “abuse” in connection with the sale of Equity Indexed Annuities, contrary to the unsubstantiated allegations that have been made. Insurance professionals take their fiduciary duties seriously. Moreover, almost every insurance company and almost every state have suitability requirements in connection with the sale of Equity Indexed Annuities, as well as regular fixed annuities. NAIC reports less than .1% of all complaints relate to fixed annuities—let alone EIA’s.
Second, unlike what has transpired in the current market melt down, not a single person to my knowledge who owns an Equity Indexed Annuity has lost any money in this market. The same cannot be said, obviously, for those who hold stocks, mutual funds, and variable annuities.
Third, I am advised by counsel that Equity Indexed Annuities are, in fact, not securities, and, therefore, it would seem that there is no logical basis for your extension of jurisdiction into this area. Moreover, the insurance companies are already subject to comprehensive and extensive regulation in all 50 states.
Fourth, to my knowledge, there has been no insurance company failure where investors did not receive back at least all of their principal, a sign that the insurance industry is doing a much better job of regulation than other sectors of the financial markets.
Fifth, your proposed intervention will restrict access to a popular product that is desired by many consumers. Many independent insurance producers and financial planners will be forced to stop offering EIAs because of the substantial costs of becoming registered representatives with no corresponding benefit to the consumer. This result seems illogical, given that EIAs are a non-market alternative, when market-based investments are melting down.
In summary, I believe that there is no justification for the Proposed Rule and strongly oppose adoption of the same.
Sincerely,
Dennis M. Brown
M & O Marketing, Inc.
Vice President