By Jim Connolly
The growing concern that annuities might now be subject to the same stranger-originated abuses that life insurance face led to a decision to hold a public hearing to air the issue, says Connecticut Insurance Commissioner Thomas Sullivan.
The National Association of Insurance Commissioners, Kansas City, Mo., made an announcement on March 3 that it intends to hold a public hearing on the emergence of stranger originated/owned annuities. Details of the hearing are still being worked out but it will not be held during the spring NAIC meeting in Colorado which runs from March 25-28. It could be held in New York in May, he added.
Sullivan says that the announcement was made after he received approval yesterday from NAIC commissioners to proceed with the effort. His primary concern, according to Sullivan, is to “preserve the tenet of insurable interest and to determine whether consumers are being ripped off.”
The decision was made to gather more information on the issue based on a number of factors including the recent debate over a termination provision in variable annuity guarantees as well as a Wall Street Journal article last month which reported on the case of a Rhode Island attorney who the article says solicited the elderly to buy annuities as a front for investors.
Sullivan says that holding a hearing was also prompted by the growing concern among regulators that there could be a stranger originated issue with annuities. When asked if there were any other investigations other than one in Rhode Island that were being undertaken, Sullivan said that as a regulator he wouldn’t comment on any potential investigations but that it was a more general awareness that the topic is one that needs to be investigated.
When asked whether concern was over the suitable sale of annuities in general or specifically related to STOLI, he responded that regulator concern was specifically related to STOLI. He added that the discussion would include both stranger originated and stranger owned annuities because “the purpose is to learn and not to limit the discussion.”