Annuity Industry Caught Off-Guard By DOL Rule
April 6, 2016 by Cyril Tuohy
They didn’t make it, and the annuity industry was caught off-guard.
Fixed indexed annuities (FIAs), which had originally been left out of a draft proposal of the Department of Labor’s new fiduciary rule, were added to variable annuities as the two classes of annuity products requiring an exemption.
For advisors to proceed with a sale of annuities under the exemption, they will have to meet a much higher disclosure and transparency bar than in the past, according to a preliminary reading of the final “conflict of interest” rule published Wednesday.
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In an email to InsuranceNewsNet, Sheryl J. Moore, president of Moore Market Intelligence and publisher of Wink’s Sales & Market Report, said she was “disappointed to hear” that FIAs had been lumped in with variable annuities under the BIC exemption.
“Indexed annuities were a ‘back up plan’ for many variable annuity carriers,” she said. “It appears that those plans may be changing.”
FIAs delivered a record fourth quarter with sales of $15.5 billion, a 30 percent increase compared with the year-ago period, according to Wink’s Sales & Market Report.
The hot-selling FIA category also finished 2015 at a record $53 billion in sales, an increase of 13 percent over 2014.
The nation’s top three FIA carriers last year were Allianz Life, American Equity Companies and Security Benefit Life, according to Wink. Unless those companies are truly diversified, the DOL’s final rule could pinch their bottom lines.
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