Indexed Annuities (A) Working Group
Joint Executive (EX) / Plenary Committee Summary Report
Summer 2009 Meeting Summaries Index
The Indexed Annuities (A) Working Group met on Sunday, June 14 at 2:30 p.m.
The Indexed Annuities (A) Working Group of the Life Insurance and Annuities (A) Task Force had the primary task this year of conducting a coordinated, nationwide data call and issuing a public report regarding annuity products with a specific focus on the sales and marketing practices of indexed annuities.
The State of Iowa, on behalf of the Working Group, issued a nationwide data call on Dec. 1, 2008, to assist all states in identifying issues and trends in the fixed indexed annuity marketplace. The data call was issued to 69 companies domiciled in 22 states. Companies were required to complete and return the data to Iowa by Feb. 13, 2009. Ultimately, 50 responses were received. As a group, these insurers wrote in excess of $67 billion in fixed annuity premium for the years 2005, 2006 and 2007.
There is at least one significant finding in the report. Since the issuance of the data call, significant changes have taken place within the annuity industry. Since the call was issued in December 2008, 12 of the companies have either left the annuity business or have gone into rehabilitation. Sales of variable annuities have decreased beginning last year, while sales of fixed annuities have increased, making the information gathered in this data call of what is being sold not as relevant as if the market had not changed. Also, the top 10 index writers have changed because of some pulling back from the market or capping of their sales for 2009. The top 10 writers in the data call may not reflect the top writers in the current market environment. It is anticipated that the market will continue to change throughout 2009.
The data call covered the calendar years of 2005, 2006 and 2007, and contained 43 elements broken into the following five broad categories:
- Premium volume by type (fixed and variable, including both new and replacement as well as surrendered annuity policies).
- Premium volume by distribution channel.
- Premium volume by age group.
- Company procedures/rules to surrounding oversight of suitability recommendations by producers.
- The use of suitability forms.
The report addresses each category and the results obtained from the data call.
The Working Group has completed its charges with the issuance of this report and, as such, may now be disbanded.
Action Items:
None
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