IRI, ACLI express support for CLEAR Forms Act

Two industry organizations expressed their support for a bill in Congress that tackles a long-standing issue requiring certain insurance and annuity products to be registered using forms intended for corporate securities offerings.

The Insured Retirement Institute and the American Council of Life Insurers issued letters of support for the Consumer-Led Enhancement of Annuity and Insurance Registration (CLEAR) Forms Act, which was the subject of a recent hearing by the House Financial Services Subcommittee.

The legislation builds upon Congress’s bipartisan enactment of the Registration for Index-Linked Annuities (RILA) Act in 2022. That law recognized that RILAs should be subject to a registration and disclosure framework that is useful to consumers and tailored to the product’s characteristics. The CLEAR Forms Act extends that principle to other insurance products registered with the Securities and Exchange Commission.

In their letter to the subcommittee, IRI and ACLI said:

“The CLEAR Forms Act would correct a longstanding problem that requires innovative insurance products, such as registered index-linked life insurance and contingent deferred annuities, to be registered with forms designed for corporate securities offerings. Rather than providing consumers with standardized, product-specific disclosures, insurers must provide extensive information about company operations and financial reporting that is often unrelated to the consumer's purchasing decision. Prospective RILU or CDA buyers are inundated with lengthy and irrelevant disclosures while key product features, risks, benefits, and limitations are more difficult to identify and understand.

“The current registration framework also imposes substantial costs and operational burdens on insurers seeking to develop and offer innovative products. This creates unnecessary barriers to entry, discourages innovation, and ultimately limits consumer choice.”

The letter went on to say that the CLEAR Forms Act “would remedy these shortcomings by directing the SEC to establish registration forms specifically designed for registered index-linked life insurance, contingent deferred annuities, and other registered nonvariable insurance contracts. Importantly, the legislation requires the SEC to develop a disclosure framework focused on the information consumers need to make knowledgeable decisions, including through consumer testing and plain-language disclosure principles.

“The bill would also promote consistency across SEC registration requirements for insurance products, allowing consumers to receive more comparable disclosures and insurers to operate within a more coherent regulatory framework.”