Bill to kill SEC’s RILA registration system puzzles many, faces little hope of passage

A Republican Congressman’s bill to kill the SEC’s new registration system for index-linked (RILA) and market value adjustment annuities (MVA) perplexed industry groups and consumer advocates who strongly supported the rule.

Rep. Gary Palmer, R-Ala., introduced House Joint Resolution 209, which would express congressional disapproval of the new RILA and MVA registration regulations. Adoption of the resolution would overturn the new regulations that were invoked in July.

The American Council of Life Insurers, the Insured Retirement Institute and other financial services groups lobbied the SEC for two decades to let them use more simplified forms for their products rather than traditional variable annuities that are subject to SEC registration requirements. Congress called for the SEC to change the rule in an appropriations bill passed in 2022.

Rule would allow faster annuity introduction

The new rule means life insurers can introduce more annuities more quickly, reducing both complexity and cost. Life insurers sold $47 billion in RILA contracts in 2023, according to LIMRA, a record that will be exceeded this year.

Palmer issued no statement about why he wants to kill the new rule and his office did not respond to inquiries. Congress watchers, however, said the representative’s concern with the rule was based on principle. Palmer has long opposed agency rulemaking and has introduced more than 20 or so bills under the Congressional Review Act, which was enacted to strengthen congressional oversight of federal agencies' rules. CRA requires federal agencies to submit a report on each new rule to both houses of Congress and to GAO's Comptroller General for review before the rule can take effect.

Industry groups do not expect Palmer’s bill to be passed.

“ACLI supports the SEC’s RILA rule,” said Jack Dolan, ACLI spokesman “We don’t anticipate the Congressman’s bill moving forward this year.”

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].