Producers -- It's Now or Never to Fight SEC's 151A, NAFA Says

December 3, 2008

The National Association for Fixed Annuities (NAFA) is launching a campaign for insurance professionals to pressure their elected national representatives against the Securities and Exchange Commission’s proposal to regulate indexed annuities.

The SEC proposed Rule 151A earlier this year to consider indexed annuities securities because the products are indexed to equities markets. NAFA and others argue they are insurance products because they have fundamental features of insurance. Also, the insurance company issuing the product bears the risk while the annuity holder is guaranteed the principal.

The rule’s comment period was shorter than usual and was extended another month to close Nov. 17. The SEC received more than 4,000 responses, according to some reports.

NAFA Executive Director Kim O’Brien said it is imperative that producers step up the pressure. SEC Commissioner Christopher Cox is stepping down at the end of this year and any action on Rule 151A before then would have to be announced soon.
“Your congressman is the last best resource to make sure that we do not rush to regulation without a proper analysis and due process,” O’Brien told her members.

NAFA has drafted a sample letter for members . It includes these points:

The proposal was written hastily, with an unprecedented short comment period.
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Proponents and detractors agree that the Proposal needs to be re-drafted with significant changes and modifications.
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The insurance industry and your business will suffer serious losses both in revenue and jobs.
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Regulation of this magnitude and economic impact should not be rushed without the proper vetting of all the issues.

“Let the congressional representatives know that you make your living by making sure people have the safety and security of fixed indexed annuities and that your clients have not lost one penny since they bought it which is extremely important in light of the trillions lost these past months,” O’Brien said. “Remind them of all the work the industry is doing to ensure a safe buying environment and suitable sales are recommended to all consumers, including seniors.”

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