The
To help resolve the issue, Governor Matt Blunt requested a
The new Department of Insurance rules would help fill an existing regulatory gap within the state, under which there are no explicit requirements that the sale of a variable annuity be suitable for consumers. The rules are modeled after existing rules from the
"It is important to note that consumer representatives and the Missouri Association of Insurance Agents are supporting our efforts to require all insurance professionals to place the interest of the consumer first in the sale of variable annuities," said Insurance Director Dale Finke.
The issue of variable annuities is important within the state because of the precipitous rise of sales in the past decade. Total sales between 1993 and 2004 went up 1443%, with consumers paying nearly $1.7 billion in premiums in 2004. The Department of Insurance expressed concern that commissions for variable annuities are often high, and some consumers have been sold the products unsuitably.
In a curious addendum to the statement regarding variable annuity rules, the Department of Insurance pointed out that the new rules will not cover equity indexed annuities (EIAs), which are currently considered a type of fixed annuity, but that the state said has "many of the same investment features as a variable annuity."
EIA sales are up in the state, with an 81% jump in premium between 2003 and 2004, from $147 million to $267 million.
