Iowa Insurance Commissioner Susan Voss wants to talk with members of the U.S. Securities & Exchange Commission (SEC), following the SEC’s release of a draft proposal that would classify most indexed annuities as securities, rather than as insurance products. The rule would take effect 12 months after it was published in the Federal Register. The SEC voted 3-0 in favor of amending definitions used by the Securities Act of 1933 and the Securities Exchange Act of 1934 to reclassify annuities that fail to meet certain “safe harbor” thresholds for fixed benefits and returns as securities, similar to variable annuities.

Voss, who is secretary-treasurer of the National Association of Insurance Commissioners (NAIC) and whose state has a large indexed-annuity industry, expressed disappointment with the SEC proposal. Voss says state insurance regulators have passed tough indexed annuity suitability standards and continuing education requirements.

“We take very seriously our consumer protection role, including [issuing] bulletins restricting use of senior designations that are without merit,” Voss says. “We monitor our companies very closely.” She added that an insurer backs an indexed annuity with its general fund, and the contract is not a security.

“At no time have any of the securities commissioners engaged insurance regulators in the nature of our regulation,” Voss says in a statement. “Letters have been sent to Commissioner Cox, and I’m hopeful for a meeting…. We should all be working to protect consumers in regard to the products we regulate, not spending time arguing over who regulates what.”

Voss Calls For Teamwork As SEC Airs Proposal (National Underwriter 6/26/08)

July 2, 2008