Allianz applauds Court's comments on “Arbitrary, Capricious” SEC Rule 151A. The largest annuities provider is urging that "the economic crisis proves we must keep fixed index annuities options for consumers."
If enacted, the rule would have a chilling effect on industry, increase costs of life insurance annuities and decrease options for consumers. Allianz Live this morning released a media statement on Appeals Court findings about SEC Rule 151A.
“We are pleased the Appeals Court recognizes that the ramifications of Rule 151A have not been fully vetted. A thorough analysis will reveal it will have a chilling effect on the industry and its distribution channel,” said Gary C. Bhojwani, president and CEO of Allianz Life, the largest carrier of fixed index annuities (FIAs) in-force, valued at approximately $41 billion. Allianz Life maintains that FIAs are insurance products that do not meet the standards to be securities. The Circuit Court of Appeals in Washington, DC, filed its findings last week.
“Perhaps the SEC had a negative misconception about FIAs when it originally filed the rule, but their concerns should be allayed by the proven financial protection FIAs continue to give during the economic crisis. Millions of people have protected their retirement savings because they own fixed annuities. In fact, not one of our FIA customers has lost a penny due to the crisis.
“We must keep FIAs as options for consumers. In the last two years, Americans have lost $2 trillion from their defined contribution retirement accounts. Pensions have been scaled back, social security benefits now exceed payroll taxes, and market investing is riskier than once thought. On the bright side, annuities are the only products that provide both guaranteed income for life and principal protection.
“Standard insurance requirements, such as minimum guaranteed floors on account values, are more likely to have real-world benefits than adding federal securities laws. Overlapping, inconsistent regulation doesn’t make any sense. It would be counterproductive to our shared goal of providing the best, most transparent forms of consumer protection.
“What consumers and the industry need is a uniform set of industry standards, such as those employed by Allianz. Our practices exceed current requirements in most areas and are recognized by state regulators and industry associations for their strong focus on consumer protection. This approach can be achieved by the states rather than an expensive, complicated federal regulatory apparatus.”
– End of Statement –
Allianz urges the industry to adopt uniform practices that enhance consumer protections, such as its leading suite of suitability standards:
* Agent training on how to accurately assess individual financial situations
* A mandatory Code of Best Practices to be completed by agents
* A nationwide Suitability Process with objective scoring methodology to help determine product fitness for annuity buyers (mandatory for all applications).
* A Statement of Understanding, post-purchase surveys and a 75+ Customer Care Program to ensure annuity customers understand and are comfortable with their purchased products.
* The Allianz Professional Designation Policy, which recognizes designations that are credible, reputable, and reflect the producer’s level of expertise.
Written by Allianz Life
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