A bill approved by the Utah House would place everyone selling variable life-insurance policies and annuities under the joint jurisdiction of the state Division of Securities and the Insurance Commission.
Currently, the regulation of some salespersons who peddle such products falls only under the jurisdiction of the Insurance Commission. Under HB65 sponsored by Rep. Jim Bird, R-West Jordan, those who sell variable annuities or life-insurance policies that typically are invested in stock market funds also will be regulated by the Securities Division.
"Under current law we have an anomaly where persons selling these products are required to get a state securities license because of federal law but the state Securities Division cannot enforce securities laws related to the sales of the products," said Keith Woodwell, director of the Division of Securities.
Woodwell, who worked with Bird to prepare the bill, said money paid into variable annuities most often are invested in pools tied to stock market funds, much like mutual funds. The payout rate therefore varies depending on how the stock portfolio performs.
"So these behave much more like a security, a stock or mutual fund, because that's how your underlying annuity is invested," he said.
Woodwell said variable annuities are frequently marketed through free lunch or dinner seminars for seniors as "one-size-fits-all" products
But he characterized variable annuities or life insurance as "risky products not suitable for many investors."
"It is a problem," said "We've had quite a few complaints about sales practices involved with insurance salesmen selling variable annuities."
Bird, who owns an insurance agency, also said current state law requires those who sell variable annuities and life insurance to be licensed by both the Insurance Commission and Securities Division. But the securities license requirement doesn't apply to salespersons who convince consumers to replace their current annuities or policies with variable products.
"They can just come in a replace it without having to go through getting a license, talking to the client, leaving them a prospectus," said Bird.
"That doesn't seem like it's in the consumer's best interest to me," he said.
HB65 has passed the Utah House and is awaiting action in the Senate Business and Labor Committee.
Susan Baird, of the Utah branch of the National Association of Insurance and Financial Advisors, said her group was not taking a stand on the bill. Some members who already are licensed by both agencies favor the bill while others who are not are wary, she said.
