The issue of who will regulate indexed annuities – the states, as they do now, or the federal government, as is being proposed by the Securities and Exchange Commission (SEC) – got another airing at the just-completed annual meeting of the National Conference of Insurance Legislators (NCOIL).

NCOIL’s Life Insurance and Financial Planning Committee unanimously passed a resolution opposing the proposed SEC Rule 151A. But SEC Regional Director David Nelson of the commission’s Southeast Regional Office in Miami said the commission believes it has Supreme Court precedent on its side. “That the SEC has the jurisdictional authority to regulate equity-indexed annuities is clear. The reasons to assert that authority now are also clear,” Nelson told the panel.

Iowa Insurance Commissioner Sue Voss made the case that state regulators have moved decisively in getting the National Association of Insurance Commissioners’ Suitability in Annuity Transactions Model and the Annuity Disclosure Model Regulation adopted broadly across the United States, and have sought partnership with the SEC in dealing with the indexed annuity issue. “This is an insurance product that has an indexed portion that’s tied to an index, and just because you have a piece of lettuce on a ham sandwich doesn’t make it a salad,” Voss said.

The comment period on the proposed change ended on November 17, and the SEC has yet to issue a ruling.

November 25, 2008