Some possible reasons for this extension could be that some parties publically filed a statement with the SEC saying they couldn't achieve a consensus prior to Sept. 10. The American Council of Life Insurers' (ACLI) letter dated September 19 and sent to the SEC asked that their submission be treated as a "...placeholder letter in the comment file that will be followed by a more extensive submission dealing with the many substantive aspects of the proposals and addressing the 100 individual questions in the release." The ACLI went on to state that as a trade association representing life insurers, it is "...prudent to take the time necessary to properly analyze the complex and comprehensive proposals on a consensus basis that is inclusive of our broad membership."
And it may also be possible that members of Congress asked for an extension; and/or the SEC perceived that a court might vacate any rule that the SEC adopted because of some defect of process, such as an inadequate database with which to analyze the cost-benefit factor or an extensive input from state securities regulators, but not from state insurance regulators.
As NAFA has reported, several parties asked for an extension of 90-120 days. The time of this extension amounts to an extension of a little more than 60 days. NAFA has heard many of its members speculate that the SEC's attention given to proposed Rule 151A may have been distracted by the financial crisis. So, in fact, the extension is not really "costing" the SEC any time, because the commissioners don't expect to get back to Rule 151A for another month.
NAFA is aware that the SEC received more than 2,000 comment letters and you can imagine the work load of reading, analyzing and comparing so much information. Given the number of comments already received by the SEC, it does not appear that the extension's purpose is to obtain more general comments. In addition, I've read a comment letter or two where parties take issue with points made in other comment letters -- and the extension could produce more of these counterpoints.
NAFA sees the extension as an opportunity to focus more effort on its economic impact analysis, though it was given short shrift in the proposal. NAFA believes the economic impact on consumers who seek the guaranteed principal protection of fixed annuities, particularly now, given the current economic and stock marketing crises, will be devastating. This subjects the consumer, agent and insurance carriers, as well as marketing companies to:
- Duplicative and redundant regulations and oversight
- Carving out an additional 2 percent from the product to pay FINRA and broker/dealer overrides
- Limiting access to the product through only one distribution channel
- Broker/dealers that have had a history of negative bias to the product's design and guarantees
NAFA was created to provide training, education and foster better understanding of fixed annuities including declared-rate, index and payout. It is the only independent, non-profit organization dedicated exclusively to the education and promotion of these unique insurance products.
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.