Several NAIC working groups are set to tackle a host of issues impacting annuity products in 2013. These initiatives reflect the importance that annuities are playing in consumers’ retirement playbooks and industry’s innovations to provide guaranteed retirement income products to consumers.
Iowa First Deputy Commissioner Jim Mumford continues to quarterback the Annuity Disclosure (A) Working Group (the Annuity Disclosure WG). The Annuity Disclosure WG presented a draft annuity buyer’s guide at the Fall National Meeting and requested comments by January 2, 2013. The buyer’s guide was redrafted by consumer representatives with comments by industry. The Annuity Disclosure WG anticipates adopting the annuity buyer’s guide before the Spring 2013 National Meeting.
Deputy Commissioner Mumford is also quarterbacking the new ERISA Retirement Income (A) Working Group (ERISA Retirement Income WG). It has been tasked with working with the White House Council of Economic Advisors (CEA), Department of Labor (DOL) and other federal agencies, in coordination with the NAIC Government Relations (EX) Leadership Council, to consider possible options to facilitate the use of annuities within defined contribution plans. During its first huddle on December 1st, the ERISA Retirement Income WG discussed requests by CEA and DOL for additional information about the regulation of annuity providers, the providers’ financial soundness, and guaranty fund protection. In addition, it heard employers’ concerns about reliance on the DOL safe harbor in selecting annuity providers and products. In 2013, the ERISA Retirement Income WG will continue to obtain information on these issues and drafting groups within and outside the NAIC to assist it in resolving the issues.
At the 2012 Fall Meeting, the Contingent Deferred Annuity (A) Working Group (the CDA WG) reviewed three different regulatory proposals for CDAs, as follows:
- CDAs should be regulated as variable annuities for purposes of market regulation and consumer protection.
- The appropriate task forces or working groups with appropriate subject matter expertise should review the adequacy of existing laws and regulations applicable to the solvency of annuities as applied to CDAs.
- The creation of a definition for CDAs. CDAs would be defined to mean an annuity contract that establishes an insurer’s obligation to make periodic payments for the annuitant’s lifetime at the time designated investments, which are not owned or held by the insurer, are depleted to a contractually defined amount due to contractually permitted withdrawals, market performance, fees and/or other expenses.
While the CDA WG heard comments on the various proposals, no proposal was adopted.
The actuaries are also in the game. At the 2012 Fall Meeting, the Life Actuarial (A) Task Force (LATF) discussed options for changing the required reserves for fixed annuities with guaranteed living income benefits. This included making changes to Actuarial Guideline XXXIII (AG 33) or to Actuarial Guideline XLIII (AG 43) to create a level playing field for fixed and variable annuities. LATF also unveiled a proposal to amend AG 33 with respect to a participating fixed annuity product with no cash value. Finally, LATF is considering the work plan to review AG 43 and CARVM for variable annuities and decide whether changes to the requirements should be recommended.
In an audible, and after over six months of no public activity, on December 21st, the Separate Account Risk (E) Working Group (the SARWG) announced a January 9, 2013 meeting to resume its discussion on insulation classification for separate account products. Accompanying its announcement was the SARWG’s product review in which it classified various products funded by separate accounts with general account guarantees. The product review included recommendations that several types of annuities funded by separate accounts with general account guarantees not be insulated products.