You are here:HomeIssuesProtecting State Insurance Regulation 2010Court Ruling, Overhaul Bill Keeps Indexed Annuities State-Regulated

Court Ruling, Overhaul Bill Keeps Indexed Annuities State-Regulated

On Monday July 12, the U.S. Court of Appeals for the District of Columbia ordered a Securities and Exchange Commission rule to regulate equity-indexed...
July 21, 2010

The combination of a District court ruling and an amendment in the just-passed financial services overhaul bill will keep indexed annuities state-regulated.

On Monday July 12, the U.S. Court of Appeals for the District of Columbia ordered a Securities and Exchange Commission rule to regulate equity-indexed annuities as securities to be vacated. The ruling was seen as a victory for a coalition of annuity issuers and some state insurance commissioners, which had battled the rule. In addition, the sweeping financial overhaul bill, approved by the Senate on Thursday July 15, includes an amendment that would ensure that indexed annuities remain under the regulation of state insurance departments.

The overturned SEC rule would have required that indexed annuities be registered with the SEC and sold by registered broker-dealers. Sen. Tom Harkin (D-Iowa) persuaded a conference committee to adopt the indexed annuity amendment as part of the financial overhaul bill. Observers say the Harkin amendment should keep the SEC from asserting jurisdiction over indexed annuities. James Mumford, first deputy commissioner at the Iowa Insurance Division, says a new suitability model developed by the National Association of Insurance Commissioners (NAIC) will offer additional investor protections.