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An insurance commissioners’ working group opened up a new comment period and scheduled two 90-minute conference calls in a bid to finalize an annuity sales model rule. Comments are being accepted until July 10 on two topics: conflict of interest and the care obligation.
The rule proposed by the New Jersey Bureau of Securities would require all financial advisors registered in the state to act as fiduciaries, making New Jersey one of the first states to propose a uniform fiduciary standard for all financial services professionals.
Commissioner Doug Ommen hopes to retain suitability ideas even as the word is scrubbed from his annuity sales proposal. The driving force is to harmonize state insurance regulations with the new Securities and Exchange Commission’s Regulation Best Interest, Ommen explained.
LIMRA and LOMA are offering a comprehensive training program to help sales professionals and home office employees understand and comply with New York Regulation 187.
The National Association of Insurance Commissioners’ working group is studying a proposal to double the time indexes must be in existence to be used in annuity illustrations from 10 to 20 years. Regulators are concerned that consumers are being misled by unrealistic indexed annuity illustrations.
A National Association of Insurance Commissioners’ subgroup held an at-times contentious conference call Tuesday to discuss AG 49. Regulators and industry representatives sparred over whether insurers are trying to ‘game the system’ with IUL illustrations, or just being ‘innovative.’
Under a unanimous consent maneuver, the Setting Every Community Up for Retirement (SECURE) Act could be voted on quickly. That means that the Senate could pass the bill Friday, as long as no senator objects The bill would expand access for annuities inside plans, and allow small employers to band together to offer plans.
Labor Secretary Alexander Acosta testified recently before the House Education and Labor Committee and discussed the late fiduciary rule, which was thrown out by the Fifth Circuit Court of Appeals. Acosta was not very clear, one industry expert said, but is likely overseeing efforts to replace the fiduciary rule with a fairer rule.
“I think there’s a ton of tailwind for this product,” one expert said.
The group agreed to require distribution of a policy overview in tandem with the buyer’s guide on all life insurance policies. Policies without an illustration will also include a premium and benefit pattern summary. The policy overview is expected to be completed by the NAIC Summer Meeting in August.
The Retirement Enhancement and Savings Act (RESA) and the Setting Every Community Up for Retirement Enhancement Act of 2019, or SECURE Act, are very similar bills that would boost annuity use in retirement plans. The House is expected to vote on the SECURE Act before a Memorial Day recess period.
The companies have signed a letter of intent and high-level executives are said to be meeting this week on the deal. Remaining issues include a decision on the new company name and the corporate structure, a source indicated.
The National Association of Insurance Commissioners voted last week to form a task force focused on LTCi market stability. Its most significant, and most controversial, charge is to harmonize rate review processes across state lines. Many insurers continue to seek large LTCi rate hikes.
Judge Denise J. Casper ruled that an addendum to the Ohio National selling agreement commits them to arbitration with Commonwealth Equity Services. The broker-dealer is challenging Ohio National’s decision to end trail commissions on a specific variable annuity.
While the Department of Labor fiduciary rule is gone, tossed out by a federal appeals court one year ago, the compliance spotlight it shone on commission annuity sales remains. If the industry doesn’t figure out how to effectively provide distribution of annuities via advisory channels, “sales are just going to fall off a cliff,” one executive says.
The annuity sales landscape changed in a major way in 2018. Sales rebounded strongly in virtually every product line, in some cases 40 to 50 percent year-over-year. Fixed annuities led the way.
Al Bundy would not be a good life insurance prospect, but Jay Pritchett would be a warm one. The two iconic television characters played by actor Ed O’Neill represent the hot and cold of prospecting, said Vikram Kamath, director of the LIMRA Center of Excellence for Analytics.
One trend the industry is falling short on is customer engagement.
The Securities and Exchange Commission has been very deliberate with its Regulation Best Interest, which was tentatively adopted last April.Since then, not a lot has happened as the SEC collects comments and tinkers with the rule behind closed doors. But there may be a method to their madness, said Carl Wilkerson, vice president and chief counsel, securities, for the American Council of Life Insurers.
Although the insurance industry is known for moving slowly when it comes to change, the insurtech revolution is forcing executives out of their comfort zones.
The lower tax rates set by the Tax Cuts & Jobs Act means income taxes are “on sale,” says Deborah A. Miner, a tax expert and executive with Western & Southern Financial Group Distributors. Clients and advisors who take proactive advantage could see their retirement nest eggs expand significantly.
Long-term care insurance sold well in 2018, the American Association for Long-Term Care Insurance reports. According to the association, of the roughly 350,000 individuals who purchased coverage, roughly 16 percent opted for traditional health-based long-term care insurance.
The Federal Reserve did the expected today and is holding interest rates to the current range of 2.25 to 2.5 percent. The central bank’s new theme of patience and flexibility reflects its calming response since the start of the year to slow economic growth at home and abroad, a nervous stock market and persistently mild inflation.
Principal Financial is deep in talks to acquire the Wells Fargo retirement plan business in a deal estimated at about $1 billion, Reuters reports.
Deloitte’s annual M&A Outlook recorded 681 transactions in 2018 across the insurance sector, up from 621 deals in 2017. That robust M&A activity should continue this year, the report says. The appetite for insurtech capability is one of the “five buckets” that Deloitte authors separate potential 2019 M&A drivers.
A new lawsuit was field Monday challenging Ohio National’s decision to stop paying trail commissions on certain variable annuity contracts. Stephen K. Cook, an investment advisor representative with Triad Advisors, a Dallas, Texas broker-dealer, filed the class-action lawsuit in the Southern District of Ohio court.
Genworth is halting long-term care insurance and annuity sales through the broker general agency channel. All LTCi and annuity products will continue to be sold through other channels, Genworth said. In-force policies are not affected, the insurer added.
A bill regulating fixed indexed annuities cleared the Arizona State Senate this week by a 29-1 vote. The bill, which sets tougher rules for disclosures and illustrations, goes to the state House of Representatives for a vote.
A National Association of Insurance Commissioners’ working group proposed a strong plan Thursday, including doubling the time indexes must be in existence to be used in annuity illustrations. Indexes must be in existence at least 20 years under the proposed change.
The House Financial Services Committee announced today that a subcommittee hearing will be held on the SEC’s best interest rule on March 14.
Arizona is the latest state to consider its own regulation of annuity sales with a Senate bill that is moving quickly through the Legislature. The Arizona version would ban the use of indices that have not been in existence for more than 10 years in all fixed indexed annuity illustrations.
The OPTIS database logged a record 626 mergers and acquisitions of insurance agencies in the United States and Canada in 2018, including 330 transactions in the second half of the year and 148 transactions during the fourth quarter. There were 611 M&A deals in 2017, previously the most active year.
Total 2018 annuity sales increased 14 percent to $232.1 billion, compared with 2017 results, according to LIMRA. Rising interest rates and the elimination of the Department of Labor fiduciary rule are seen as factor boosting annuity sales, which are the best LIMRA has seen since it began tracking sales.
A National Association of Insurance Commissioners’ working group debated its annuity sales model throughout 2018 — mostly without success due to a few thorny issues. Finally, they put out a draft rule that skipped over many of those issues and accepted comments through Feb. 15. Those comments were released today.
Arthur J. Gallagher & Co. acquired Partners Advantage Insurance Services and AMZ Financial Insurance Services on Jan. 28. The move marked the first substantial entry by Gallagher into the independent marketing organization channel of insurance distribution.
Seventy percent of the financial services executives surveyed said their institutions have either recently completed an update of their risk management program or have one in progress.
With its LTC rider, SmartCare arrives at the intersection of two key retirement trends: rising costs of long-term care and increasing life expectancies. It is estimated that 50 percent of Americans turning 65 today will require some form of long-term care, with average lifetime long-term care expenses of $266,000, Brighthouse noted.
A National Association of Insurance Commissioners’ subgroup had disagreement today during its first conference call today on IUL illustrations. The issue is whether IUL multipliers are fooling consumers into under-funding policies, or an appropriate risk-reward option.
A National Association of Insurance Commissioners’ subgroup will resume discussions Tuesday on controversial indexed universal life illustrations. The group is expected to discuss how to illustrate products with different attributes, and whether to consider capping the credited rate.
The Alliance for Lifetime Income, formed last year to promote retirement income options, has signed on as the sole sponsor of The Rolling Stones’ 2019 “No Filter” U.S. stadium tour. The tour kicks off April 20 at the Hard Rock Stadium in Miami and continues into late June.
Ohio National tells a federal judge that “and” is the key word in its selling agreements. If the judge agrees, then the insurer’s controversial decision to end trail commissions on certain variable annuity contracts might stand.
A letter signed by 14 IMO executives was sent last month to the leading trade associations that represent annuity sellers. They say trade groups are too accepting of best-interest ideas put forth by the National Association of Insurance Commissioners.
Sen. Bernie Sanders, I-Vt., is proposing legislation to eliminate the estate tax. Called the For the 99.8% Act, it would raise $2.2 trillion from the nation’s 588 billionaires. The proposal comes two days after Senate Republican leadership proposed a bill to repeal the estate tax.
New analysis finds that just 26 percent of the total life insurance coverage needed is being met. The result is $70 billion in lost premiums for the industry. The report found that insurance companies are missing out on an average of $785 in annual life insurance premium payments per person who requires insurance coverage in the U.S.
Although the next couple years are expected to fall short of the 3 percent annual growth goal set by the Trump administration, the current economic expansion is the longest in history. And growth will remain positive at least for the foreseeable future, a Nationwide economist said.
Arthur J. Gallagher & Co. is acquiring Partners Advantage Insurance Services, a blockbuster deal that gives the Chicago-based insurance giant an entry into the insurance marketing organization space. Established in 1927, AGC is the third-largest insurance broker in the world.
Released last week, Nevada is seeking comments on its fiduciary duty proposal by March 1. Under the proposal, broker-dealers and sales representatives are subject to a fiduciary duty when providing investment advice. But they can qualify for an episodic exemption if they need the criteria.
In a report released last week, the Maryland Financial Consumer Protection Commission is recommending that a “fiduciary duty standard” be placed on broker-dealers and insurance agents doing business in the state. Companion legislation is expected to be introduced soon, state officials say.
LPL Financial broker Lance Browning refiled a lawsuit Friday seeking damages from Ohio National’s surprise decision to cut trail commissions on certain variable annuities. The plaintiff strategy is shifting from a class-action request to individual lawsuits on behalf of brokers, an attorney said.
Benefits were paid on more than 303,000 policies and passed the $10 billion mark for the first time. According to a trade association, in 2017, total claims amounted to $9.2 billion paid to about 295,000 individuals.
Less than four years after producing Actuarial Guideline 49, the NAIC is ready to tackle indexed universal life illustrations yet again. An IUL illustration subgroup has a 2019 charge to “provide recommendations for modifications to AG 49.”
MIB Group recently signed an agreement with Epic to utilize its electronic health records system. Under the agreement, MIB’s 400 U.S. life insurance members will be able to access electronic health record (EHR) data via Epic’s Chart Gateway for life insurance underwriting.
The year in life insurance and annuities featured lots of surprising news about companies moving in and out of the business. In addition, sales numbers hit new lows before bouncing back at year’s end, and new products and strategies also attracted reader interest.
Ohio National responded to a pair of lawsuits filed in the Southern District of Ohio court seeking to overturn its decision to cut trail commissions on certain variable annuities. The insurer denied all claims by an Arkansas broker-dealer, while asking the court to dismiss a lawsuit by a Texas broker.
Sammons Financial Group is building a 200,000-square-foot office with plans for additions in the future, the Des Moines Register reported. The company has pledged to add 200 new jobs to its existing base of 510 employees.
The financial services industry is conceding defeat on passing a retirement security package in 2018. But Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, have introduced the Retirement Security & Savings Act, a broad set of reforms designed to help Americans save more for retirement. It will be considered in the next session.
Sammons Financial Group will lay off an unspecified number of employees during the first quarter of 2019. The company cited efficiencies and automation as reasons behind the layoffs, which follow last month’s announcement of layoffs by Nationwide.
All signs point to 2019 being a good year to be a financial advisor. The regulatory shackles are in abeyance, while surveys show consumers are happier and better prepared when they get financial advice. In addition, annuities are on the way back and more Americans are gaining access to retirement plans.
Ohio National officially broke service contracts today on select variable annuities with a guaranteed minimum income benefit rider. Producers continue to have questions about what that precedent-setting decision means, but all are waiting on a federal court to decide on lawsuits.
Congress has a lot of its plate, but financial services would like to see a retirement income security bill get passed before the end of the year.
