August 23, 2008
The arguements concerning competition for the proposed regulations turns logic on its head.
It would exempt certain insurance companies. If this exemption allowed a majority or plurality of insurance companies to allow their representatives to market and sell the product without a security license, then the regulation is a waste of time. If a majority or plurality of insurance companies were not exempt, then a great number of insurance agents would not be able to market or sell the product. This would restrain trade and greatly reduce competition. Thereby, benefits would be reduced and cost increased to the detriment of the insured and their beneficiaries.
It is obvious to me from my experience as a Series 7 retail representative and an insurance agent that the reason for this proposal and the concerns of the security industry is the tremendous success of the equity-index annuity compared with the varable annuty, most of which have greater risk for the owner, less benefits and higher cost. The security industry want to take over the product and cutout the many insurance-only agents throughout the country. Based on past and very recent history, the insurance industry has a much better record of regulating itself than does the security industry. This proposed regulation can only act to the detriment of the public.