SEC Commissioner Uyeda Asks Insurance Industry to Help Improve Disclosure Regulation on Annuities

SEC Commissioner Mark T. Uyeda argued that the securities laws were not designed with variable insurance products in mind and highlighted ongoing efforts to improve disclosure.

In his remarks before the 41^st Annual ALI Conference on Life Insurance Company Products, Commissioner Uyeda described challenges concerning the regulation of these complex insurance products. He raised concern over the difficulty investors have in understanding Registered Index-Linked Annuities ("RILAs") and variable annuities in general. He reviewed recent Commission efforts to require the use of plain English in disclosures and to use a layered approach for disseminating information on these products to investors. He proposed that registering RILAs on Form N-4 could provide benefits for both insurance companies and investors. He also proposed incorporating more investor testing into the SEC's disclosure-based rulemaking procedures. He urged insurance industry participants to provide feedback on these issues.

Mr. Uyeda also expressed concern regarding the "extremely broad" definition and application of "covered technology" in the SEC's predictive data analytics proposal (see previous coverage). He suggested that the SEC should first seek to better understand these technologies and their benefits and risks before imposing regulations that might "stifle innovation."