Insurance mostly dodges financial reform

State regulation of equity-indexed annuities
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State regulation of equity-indexed annuities

The legislation made clear that state regulators will have oversight on equity-indexed annuities, which offer a guaranteed minimum return but are riskier than traditional fixed annuities because they are linked to an equity market such as the S&P 500 or Dow Jones Industrial Average.

There had been ongoing debate over who should regulate equity-indexed annuities. Are they an insurance product under the purview of state insurance regulators or a securities product subject to the Securities and Exchange Commission scrutiny? The act settles the issue.

"We think it's a positive because insurance regulators have that local knowledge and understand the products, and it is very easy for local consumers to reach out to their state officials if they have any questions or issues," says Charles E. Symington, Jr., senior vice president for the Independent Insurance Agents & Brokers of America, in Alexandria, Va.

Hunter differs: "We didn't like it. We thought there ought to be some federal review of that."

Impact on consumers: Now that the regulation issue is settled, there's a chance that financial companies may develop better equity-indexed annuity products.




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