BestWeek: Regulators Expected to Crack Down on Alleged Deceptive Annuities Sales.

OLDWICK, N.J. -- With increased scrutiny on sales of annuities - particularly to the elderly - states are expected to crack down on alleged deceptive practices by adopting a strict model law addressing suitability.

Meanwhile, controversy is brewing over the equity-indexed annuity, which the life industry says is a "fixed" product and therefore exempt from federal oversight. The National Association of Securities Dealers is preparing to join the fray by issuing guidance for broker-dealers on these products, according to an exclusive report in the July 22 issue of BestWeek.

The National Association of Insurance Commissioners regulation, which addresses all annuities, allows regulators to go after all distribution systems, such as companies, agents and broker-dealers--all of which are involved in the transaction process, said North Dakota Insurance Commissioner Jim Poolman.

One of the biggest debates concerns jurisdiction over equity-indexed annuities. The debate centers on whether or not they are securities. Equity-indexed annuities aren't regulated by the Securities and Exchange Commission or the NASD.

"Equity-indexed annuities are, for the most part, fixed annuities, which fall under state insurance regulation as they should," said Whit Cornman, a spokesman with the American Council of Life Insurers.

But Jeffrey D. Voudrie, president of Tennessee-based Legacy Planning Group Inc., a private wealth-management firm, calls these products a "hybrid" between fixed and variable.

Insurers classify them as "fixed" and, in so doing, "get around a lot of securities legislation" at both the state and federal levels, he said.

Other exclusive content in the July 22 issue of BestWeek:

--Atlantic Mutual Cos. President Dan Olmsted talks about his company's switch from commercial business to a focus on affluent personal lines.

--How Dublin, Ireland is successfully building a burgeoning financial services hub.

--How Commerce Insurance Group's chief executive officer feels about his company's strong position in Massachusetts, a state with a 1-million-driver residual automobile insurance market, the highest frequency of property damage liability and the fourth-most expensive auto insurance rates.

--AXA Financial Inc. CEO Christopher "Kip" Condron describes how his company has fared in its $1.48 billion acquisition of MONY Group Inc.'s operations.

BestWeek is published by A.M. Best Co. for insurance professionals, including home office executives, agents and brokers.

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