July 30, 2008
The proposed action on this matter seems unprecedented and is unnecessary.
States, not a federal regulatory agency are supposed to regulate insurance, unless the insurance product involves securites with the possibility of risk such as a variable life or annuity contract- indexed annuities do not.
An indexed annuity is not a security, it is a fixed annuity providing an interest creditng method that is disclosed to the consumer based upon a market index. The interest crediting method for "regular" annuities has always been tied to an insurance company's bond portfolio, which are securtites, but they have never been considered a security. Index annuities are no different. Just because the consumer is better informed as to what factors will determine his interest rate in the annuity contract (as they seldom were in the past), and the fact that the interest rate may possibly be more than in the past, doesn't make it a security.
I know you are trying to address all of the abuses, both real and imagined, relating to the sell of these products, but the answer is to encourage state regulators to demand a higher degree of professionalism and integrity from insurance agents. Your agency, it seems, has enough to worry about regulating its own representatives with regard to securities.