Life Insurance & Annuities

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The U.S. Securities and Exchange Commission (“SEC”) has recently proposed regulations that would limit fund sales charges and increase disclosure requirements under Rule 12b-1.  Rule 12b-1, adopted under the Investment Company Act of 1940, permits mutual funds to use a portion of fund assets to pay for the cost of promoting sales of fund shares, effectively eliminating sales load charges. …
Read More SEC Calls for New Limits on Use of 12b-1 Distribution Fee Provisions in the Mutual Funds of Variable Annuity Subaccounts

On 11 July 2010 the China Regulatory Commission (the CIRC) stated that it proposed to remove restrictions on insurance companies in China in deciding the assumed (or guaranteed) interest rates for “conventional” (non-participating) life insurance policies in order to protect consumers’ interests and encourage innovation in the sector. …
Read More China: The China Insurance Regulatory Commission Proposes to Lift Interest Rate Cap

Spurred by media reports alleging deception by some life insurers in their use of retained asset accounts[1] for disbursing death benefits to the beneficiaries of fallen United States military personnel and the apparent lack of oversight by federal and state regulators, New York Attorney General, and gubernatorial hopeful, Andrew Cuomo has issued subpoenas to leading life insurers regarding their alleged “reaping [of] hundreds of millions in secret profits while misleading families into putting benefits into insurer controlled, low yield, potentially risky accounts.” …
Read More Life Insurer Use of Retained Asset Accounts Under Fire by State Attorneys General

This updates our December 22, 2008 blog, and other related postings.  In December 2008, the U.S. Securities and Exchange Commission (the “SEC”) adopted Rule 151A (the “Rule”) classifying equity-indexed annuities (“EIAs”) as securities, and subjecting them to federal regulation effective 2011.  The Rule has been hotly debated, as some believe that EIAs are adequately regulated by states and that federal regulation would only result in additional costs in registering and selling the products. …
Read More Financial Reform Package Preserves the Role of State Insurance Departments in Regulating Indexed Annuities

Several InsureReinsure.com bloggers are attending the ALI-ABA Conference on Insurance and Financial Services Litigation in Chicago.   Earlier today, one of the panels addressed recent developments in the area of class action certification, particularly in life insurance and annuities litigation. …
Read More Live Blog — ALI-ABA Conference: Class Action Developments

The New York Insurance Department (“NYID”) prepared a draft circular letter (“Draft Circular Letter” or “Letter”) in early June, which, if finalized and issued, will require insurers to advise consumers of the implications of excess withdrawals from annuities with guaranteed minimum withdrawal benefits (“GMWB”). …
Read More New York Contemplates Disclosure for Excess Annuity Withdrawals

In Farm Bureau Life Insurance Co. v. Chubb Custom Insurance Co. et al., the Iowa Supreme Court affirmed the district court’s ruling that Farm Bureau was not entitled to liability coverage in its disputes with two applicants that were HIV positive.
Read More Iowa Supreme Court Upholds Denial of Coverage to Life Insurer For Failure to Disclose Applicants’ HIV Positive Status

This updates our December 3, 2009 posting.  The Texas Department of Insurance (“TDI”) has officially proposed regulations banning the use of discretionary clauses in insurance contracts.  The regulations are the result of a petition filed by the Texas Office of Public Insurance Counsel (OPIC) on October 28, 2009 requesting the ban. …
Read More UPDATE: Texas Moves Closer to Banning Use of Discretionary Clauses In Insurance Contracts

The Health Care and Reconciliation Act (the “Act”), signed into law on March 30, 2010, imposes a tax on annuity income to help pay for the multi-billion dollar reform package set forth in both the Act and the Patient Protection and Affordable Care Act, signed into law on March 23, 2010.  Specifically, the Act imposes a 3.8% Medicare contribution tax on individuals who earn more than $200,000 a year, and couples who earn more than $250,000 a year. 

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Read More Health Care Legislation Imposes Tax on Annuity Income

On March 28, 2010, the National Association of Insurance Commissioners (“NAIC”) issued a press release announcing adoption of revisions to the existing Suitability in Annuity Transactions Model Regulation (the “Model”). 

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Read More NAIC Adopts Revisions to Suitability in Annuity Transactions Model Regulation