August 7, 2008
While in general I applaud the SECs efforts to protect consumers, I do not think Fixed Indexed Annuities (FIAs) should be regulated by the SEC or considered securities.
As I understand the issues, one of the main concerns of your agency is really one of sales and marketing practices, and I believe that the NAIC, State Insurance Departments, Insurance Companies and individual insurance agencies have aggressively taken steps to address these issues. Regulation of FIAs and all other insurance products is best left to the various state departments of insurance and should not be federalized.
One of my biggest concerns is that the proposed rules seem to completely miss the fact that many of our risk adverse clients chose indexed products because they are not securities, and because many of these insurance products offer strong consumer guarantees. I have an entire class of clients that either do not want, or cannot afford to expose their savings to market risk and FIA's are a good fit for a significant number of them.
Fixed indexed annuities are well-designed products that give consumers guarantees, flexibility, tax-deferral, and many other advantages. The recent downturn in the stock market highlights the very strength and value of these products. By proposing this regulation the SEC could eliminate this option for thousands of Americans who have relationships with insurance companies but not brokerage houses.
Finally, I am concerned that this proposed ruling and comment period are so short. I was at a meeting of insurance agents today and 90% of them were not even aware about the proposed SEC regulation and how it would impact their business and their clients.
In summary, Indexed annuities are a class of guaranteed insurance products and should not be considered a security or subject to SEC regulation.
Respectfully submitted,
Mark B Robbins
President
Benefit Architects