If state regulators have their way, variable annuities might be regulated just as securities.
In response to the National Conference of Commissioners on Uniform State Laws investigation into whether states should treat variable product sales like securities, the National Association for Variable Annuities has told the National Association of Insurance Commissioners this is not a good idea.
Variable products are currently regulated on the national level by the Securities and Exchange Commission and the National Association of Securities Dealers. On the state level, insurance departments have regulatory control over the actions of licensed insurance agents and insurance companies.
The new movement would split regulation at the state level, with state insurance departments retaining responsibility for monitoring insurance companies and state securities departments assuming responsibility for sales.
The North American Securities Administrators Association argues that insurance departments are ill equipped to handle variable product sales, which more closely resemble the sale of securities. NAVA counters: "The current state and regulatory oversight is adequate and that additional oversight by state securities departments is unnecessary."
The next battle in the fight to increase state oversight of variable annuities goes to the lobbyists, who are expected to approach each state individually, said Michael DeGeorge, general counsel at NAVA.