September 9, 2008
SEC Headquarters,
My livelihood and business as a licensed, independent insurance agent will be greatly impacted by the Proposed Rule 151A.
I am urging you to keep the Fixed Indexed Annuity from becoming a registered product sold only through broker dealers and not by insurance agents.
The indexed product offers the consumer a strong minimum guarantee backed by the insurance company along with the opportunity to earn excess interest that is hopefully higher than traditional principal-protection products.
Both the design and sale of annuities are highly regulated by state insurance departments as are the companies who manufacture and sell them. In addition, guaranteed minimum values for annuities are regulated through the Standard Nonforfeiture Law and are applicable to all fixed annuities.
The securities regulation will add little benefit to consumer protection. Many states have already adopted the NAIC Annuity Disclosure Model Regulation and most, if not all, of the major index annuity carriers have mandated the use of a disclosure statement or certificate describing all important terms and conditions of the annuity contract, including prominent disclosure of surrender charges. Suitability reviews required of brokers under FINRA rules would not add any meaningful protections over and above what is already being done.
The Guarantees provided by an indexed annuity offer consumers significant protection against investment risk. The annuity interest crediting formula protects the owner against loss due to drops in the index over the crediting period and while the guarantees provided certainly come at a price, this is fully disclosed to the purchaser.
Please keep the Indexed Annuity from being a registered product sold only through broker dealers.
Respectfully,
John Vani
Illinois