|88% Of Public Comments Against Proposed Rule151A |
88% Of Public Comments Against Proposed Rule151A
September 22, 2008
After attempting to delete duplicate and triplicate responses from some commentators, and reading each comment to determine the intent of the author, I believe that 2046 of the total 2328 unique comments were against implementation of the SEC Proposed Rule Indexed Annuities and Certain Other Insurance Contracts (S7-14-08). Of the remaining comments 256 (11%) were in favor of turning index annuities into securities and 26 (1%) did not express an opinion.
I do not sell annuities. Never have and never will...I am uniquely qualified to comment in favor of this proposed rule.
The comments in favor of making index annuities securities seemed to divide into three different camps. The first camp didn't appear to have a clue how index annuities work and just assumes they must be securities. The second camp says anything that involves a securities index must automatically be a security. And the third camp says they realize index annuities are not securities but that they are being mis-sold by agents acting as unregistered investment advisors and one way to clean up this problem is to make index annuities securities.
The comments against Proposed Rule 151A has three major groupings too. One group's argument seems to be that you shouldn't make index annuities into securities because you will cost them money. Another group says that this is all a conspiracy by FINRA and the broker/dealers to protect their securities commissions and fees, and that there really isn't a problem. Another group simply argues that FIAs are fixed annuities because they provide guarantees that make them so.
People in favor of 151A were some reregistered reps, life insurance agents, some variable annuity carriers such as AXA and The Hartford, the Financial Planning Association, a couple of lawyer groups, and, of course, NASAA and FINRA. Folks opposed to 151A were index carriers and agents selling index annuities, several state insurance departments and NAIC, but joining them were a number of financial planners, advisors, registered representatives and 18 Congressman that argued why the SEC proposal should not be enacted.
Number of Times SEC Compared to the Russians Or Stalin: 2
There were several groups that said they were neither for nor against the proposed rule as long as the final rule did not affect them. Comments were received from Assn. for Advanced Life Underwriting, America's Health Insurance Plans, National Assn. of Health Underwriters, and NAVA National Assn. that I read as saying "Do whatever you want to those index annuity people as long as you don't hurt me" – a Chamberlainesque response to the situation. Several other groups including American Bankers Insurance Assn., National Governors Assn. NCOIL and ACLI simply asked for the comment period to be extended.
At this stage the SEC could reopen the comment period, enact the original or revised proposal, or do nothing. The last index annuity comment period ended in 1997 and 2008 was the first time an index annuity rule was proposed.
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NAFA is the National Association for Fixed Annuities. NAFA was created to foster a better understanding of all fixed annuities, regardless of interest creditin strategies. It is the only independent, non-profit organization dedicated solely to the promotion and preservation of these unique products. Permission to distribute and/or reproduce this document for NAFA members may be given upon request. Any unauthorized distribution is strictly prohibited.