Two industry groups are backing a new bill that would revert mandating annuities and life insurance products to register as securities.
The Insured Retirement Institute (IRI) and the American Council of Life Insurers (ACLI) issued support for the Consumer-Led Enhancement of Annuity and Insurance Registration Forms Act, or the CLEAR Forms Act Bill.
The proposed legislation, led by Representative Zach Nunn (R-IA), would direct the U.S. Securities and Exchange Commission (SEC) to create registration forms for contingent deferred annuities, registered index-linked life insurance products, and nonvariable insurance contracts, all products that are currently considered securities. It would ultimately help clients compare annuity and life insurance options with other products.
The bill tackles a longstanding rule for insurance companies. Under the current regulatory framework, insurers have to provide information about company operations and financial reporting unrelated to consumer’s purchasing decision. These additional disclosures often create further complexity and confusion for prospective RILU and CDA buyers, while also increasing costs, the two IRI and ACLI state.
“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 IRI and ACLI said in a statement.
The new disclosure framework would also focus on information consumers need to make knowledgeable decisions on annuity and life insurance products and would provide consumer testing and plain-language disclosure principles.
The bill expands upon the Registration for Index-Linked Annuities (RILA) Act in 2022, which acknowledged that RILAs should be governed by a framework that emphasizes the product’s characteristics. The CLEAR Forms Act would extend this agenda to insurance products registered under the SEC.