Legislation introduced in the U.S. House of Representatives this week seeks to require the Securities and Exchange Commission (SEC) to revise its rules on the issuance of certain annuity products.
The Registration for Index Linked Annuities Act (H.R. 4865), introduced by U.S. Reps. Alma Adams (D-NC), Dean Phillips (D-MN), and Anthony Gonzalez (R-OH), directs the SEC to devise a new form for annuity issuers to use when filing registered index-linked annuities (RILAs).
Currently, these products must be registered using forms designed primarily for equity offerings and therefore require extensive information that is not relevant to prospective annuity purchasers. Also, these forms require disclosure of financial information prepared in accordance with generally accepted accounting principles, which many insurers are not otherwise required to produce.
The Insured Retirement Institute (IRI) supports the bill, saying it addresses the misalignment between the current registration forms used for RILAs and the information needed by investors who might benefit from purchasing these products.
“The current rules and processes to register RILAs stymies innovation, creates a barrier to entry into this growing market for insurers that do not produce GAAP financials, and impedes consumer comprehension and choice with excessive and confusing information,” IRI President and CEO Wayne Chopus said. “A new registration form more closely tailored to the particular products being offered would ensure that consumers have access to the pertinent information they need to make an informed investment decision.”
Chopus said this regulatory structure ultimately impairs consumer choice without any corresponding benefit to consumers or the SEC.
“The modernized approach contemplated by this legislation will encourage innovation and ensure investors can easily find the information they need about RILAs and other innovative products without having to wade through irrelevant, excessive, and confusing disclosure documents,” he added.
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