November 17, 2008
The proposal is not supported by any empirical evidence that supports the Commissions
claim that widespread abuses in selling the product exist. The Commission cites its concern
over improper sales practices as the primary basis for proposing Rule 151A. Yet, the
Commission provides no study, research findings or statistical information to demonstrate or
suggest that the abuses are endemic or pervasive. 41 states have adopted the NAIC
Suitability Model and the NAIC reports that .1% of all complaints filed with state insurance
departments relate to fixed indexed annuities. Members of the fixed indexed annuity
industry, insurance industry groups such as the ACLI, NAIFA, NAILBA and IMSA, and insurance
regulators deplore fraudulent, misleading or abusive sales practices.
The Commissions action would restrict public access to an increasingly popular product.
Many independent insurance agents such as you have indicated that they would not make
fixed indexed annuities available to their consumers if the annuities were registered as
securities – particularly because many such independent insurance agents do not desire to
become registered representatives associated with broker-dealers due to the cost and
administrative burden relative to requirements that are inapplicable to the business of
insurance. The result of agents deciding not to offer this valuable product would naturally
limit public access to the product. Such a result is harmful to the public because it restricts
the availability of a product which provides the opportunity for greater potential interest
while also providing principal and minimum interest guarantees