September 3, 2008
I strongly oppose the SECs proposed rule 151A. Proposed rule 151A is not only unnecessary but detrimental to the sales process of fixed indexed annuities. The state regulations already in place are more than sufficient to benefit and protect all parties involved in the sale of fixed indexed annuities, but mostly in the protection of the prospective clients. These regulations cover suitability of insurance agent recommendations, annuity disclosure and advertising, agent licensing and training, penalties and enforcement actions for noncompliance with sales practices requirements, and unfair trade practices including misrepresentation of product terms and conditions. In force guaranteed minimum values are also applicable to all fixed annuities and are regulated through the Standard Nonforfeiture Law.
Any benefit from the proposed securities regulation would be mirroring the existing benefits from the NAIC Annuity Disclosure Model Regulation and disclosure forms with prominent notification of surrender charges, as well as required suitability forms.
Fixed indexed annuities are valuable insurance products that help clients protect and grow their retirement savings as well as eliminate downside risk. A fixed indexed annuity allows the purchaser to not lose any principal due to market performance, unlike similar products such as stocks, mutual funds, and variable annuities. Many of our older clients routinely tell us that they enjoy the security in their fixed indexed annuity in todays tumultuous economy while also enjoying the option to tie their interest earnings to the SP 500. State and company regulations ensure that the producer makes the correct assessment in regards to the sale of fixed indexed annuities.
If proposed rule 151A is set into place, the fixed indexed annuity market would be sufficiently impaired and consumers would be the largest casualty. Please allow an extension of the comment period for more thorough research and discussion.
Sincerely,
Morgan Farrell
The Brown Agency