NAIC Forms Work Group To Better Regulate Index-Linked Annuities

Registered index-linked annuities are the shining star of recent annuity sales reports and now they have earned the attention of state insurance regulators as well.

A National Association of Insurance Commissioners' task force today created a subgroup to focus solely on the index-linked annuity products.

"These products are exclusively filed in the states as variable annuities and are funded through non-unitized separate accounts," read a notice to the task force from Pete Weber, chief life actuary at the Ohio Department of Insurance. "The task force has discussed developing a draft standard for minimum interim values for these products and providing direction for implementing the standard."

Regulators gave the Index-Linked Variable Annuity Subgroup a 2021 charge to: Provide recommendations and changes, as appropriate, to nonforfeiture, or interim value requirements related to Index-Linked Variable Annuities.

“They just don’t fit well into our existing regulation,” Weber said during today's conference call.

Weber will head up the new subgroup.

Strong Sales

Registered index-linked annuities are also known as buffer, hybrid, or structured annuities. By any name, sales continue to experience significant growth as additional companies introduce new products. In the first quarter 2021, RILA sales were $9.2 billion, 89% higher than first quarter 2020, the LIMRA Secure Retirement Institute reported.

“Simply put, the current economic environment favors RILAs,” said Todd Giesing, assistant vice president, SRI Annuity Research. “RILAs offer better pricing than indexed annuities to investors looking to mitigate downside risk and enjoy potential investment growth as the bull market continues.”

As more carriers enter the RILA market and some are expected to introduce GLB riders to this product line this year, SRI is forecasting RILA sales to grow as much as 50% in 2021 and the RILA market to grow through 2025.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.