September 8, 2008
To Whom This May Concern,
I currently sell Fixed Indexed Annuities and oppose the ruling of making these products a security. I use this product for safety of principle.
I have found that the FIA is a fixed product and people purchase the product for many of the same reasons people purchase savings instruments such as CDs or Fixed Annuities. Unlike true security products, the purchaser is NOT directly impacted by market fluctuations. Negative investment risk fluctuation to the purchaser is eliminated entirely. FIA purchasers assume the benefits and rewards of a Fixed Annuity. Market fluctuations do NOT affect principal value or past interest credits.
Issues with suitability have been decreased substantially the past few years with the insurance companies taking much more aggressive stance on client suitability prior to the policy being issued. Suitability regulations in most states and the sale practices required by insurance companies already meet or exceed the federal requirements. Complaint resolution through a department of insurance is much more effective that provided in securities law. Rather than hiring an attorney and going to court, a consumer working with their local department of insurance receives direct representation at no cost.
This proposed action will significantly harm the comsumers by raising the costs on these products. Variable annuities already outsell FIA's and are regulated. The FIA is significantly different in its use and client base.
This change will cause a negative economic impact well in excess of $100 million to small agencies within insurance industry. This violates the Small Business Regulatory Enforcement Fairness Act of 1996.
Sincerely,
Andrew Mckaig