July 9, 2008
It is common knowledge that each state department of insurance provides a great deal of regulatory protection for any Indexed Annuity purchaser.
Sales materials produced by each insurer are filed with the state along with a complete review of any product before the state permits the sale of the product within their borders.
Consumers will lose a far superior complaint resolution process should this rule be adopted.
Consumers receive rapid responses from local state insurance departments when they file a complaint. In most cases, companies and agents must provide a written response within 10 business days of an insurance department inquiry. Purchaser complaints are routinely resolved in 30 days. This is largely due to the extensive and aggressive follow up provided by the insurance department in each state. If necessary, a purchaser can meet personally with a department of insurance representative to help them resolve any complaint.
The process for complaint resolution within the SEC will be dramatically slower, more complex and more costly for the consumer. They may be subject to the cost of legal representation and the delays of litigation. All of this can be avoided completely through the state regulatory model within the department of insurance.
The SECs own website provides investors warnings about their lack of ability to help consumers resolve complaints. Sometimes a complaint is successfully resolved when we ask a firm to report to you and us. But in many cases, the firm or company denies wrongdoing, and it remains unclear as to who is wrong or whether any wrongdoing occurred at all. If this happens, we cannot act as a judge or an arbitrator and force a broker, brokerage firm, or company to resolve your complaint. But the law allows you to take legal action on your own. (http://www.sec.gov/investor/pubs/howoiea.htm)
So, if a consumer complains and their broker denies wrongdoing, the consumer has no options other than costly litigation. Conveniently, the SEC site even provides advice on how to find a lawyer specializing in securities litigation. (http://www.sec.gov/answers/arbatty.htm)
This is the most important element in protecting the consumer complaint resolution leading to a full restoration of value for the consumer. The inherent safety of a Fixed Indexed Annuity combined with the authority of the state department of insurance provides a far superior platform for consumer protection. The state department of insurance does have authority to address allegations of violations in insurance code. The SEC does not have such authority.