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The National Association for Fixed Annuities releases “White Paper on fixed Indexed Insurance Products including ‘Fixed Indexed Annuities’ and other fixed indexed Insurance Products at the National Press Club in Washington DC.

Milwaukee, WI - January 31st 2007 – Yesterday NAFA, the National Association for Fixed Annuities, released its White Paper in the main Ballroom of the National Press Club. The audience included industry association personnel from the American Council of Life Insurers (ACLI), Dow Jones Indexes, the National Association of Insurance Commissioners (NAIC), the National Association of Independent Life Brokerage Agencies (NAILBA), the National Association of Independent Financial Advisors (NAIFA), the National Association of Variable Annuities (NAVA) and the Insurance Marketplace Standards Association (IMSA). Journalists from industry trade publications including, Broker World Magazine, Annuity Market News, Senior Market Advisor, BestWeek, Insurance Compliance Insight and the National Underwriter, were also in attendance.

NAFA’s panel of industry experts discussed much of the background for the White Paper including its general purpose, interest crediting and risk assumption characteristics, consumer protection and suitability, common misconceptions and regulation. The panel included: Brian K. Atchinson, President & CEO, Insurance Marketplace Standards Association (IMSA); Michael R. Tripses, FSA, MAAA, FLMI, CEO/President and Chief Actuary, Creative Marketing International Corporation; Joan E. Boros, Esq., Partner, Jorden Burt LLP; Linda U. Hoitt, CLU, ChFC, FLMI, Senior Vice President, Annuity Distribution, Old Mutual Financial Network; and, Matthew Coleman, FSA, MAAA, Partner, AnnuityWorks.

Mike Tripses explained NAFA’s fundamental purpose of education and how the White Paper contributes to the public’s knowledge about fixed indexed annuities (FIAs) and other fixed indexed insurance products (FIPs). It establishes that FIPs are a natural evolution of the traditional declared rate product which offers one method of crediting interest. According to Tripses, “the goal of this conference is for NAFA to introduce a definitive source of information on fixed indexed insurance products for use by everyone: insurance companies, distributors, consumers, legislators, regulators, media, etc.”

Matt Coleman discussed the difference between interest crediting for fixed annuities including FIPs versus variable annuities. Mr. Coleman outlined clearly that indexed interest crediting is a function of the term, index value percentage change and adjustment method. He explained that the investment risk for FIPs is retained by the insurance company just as with all fixed annuities, in contrast to securities and variable annuities where the investment risk is born, by and large, by the consumer. This key difference helps distinguish securities from insurance.

Brian Atchinson of IMSA noted some of the challenges facing the fixed annuity marketplace including the increasing emphasis on suitable sales, adequate disclosures and proper training to assure that sales are being conducted properly no matter who is making those sales. Mr. Atchinson stated that IMSA and NAFA both supported the statement from the White Paper that “any financial product – whether issued by an insurance company, bank, mutual fund or other financial service company – should fit the particular needs of the person buying it.” He added that cooperative efforts to address compliance challenges can benefit regulators, companies, producers and consumers and that there are many factors that a consumer should consider when purchasing any insurance or financial product including a company’s financial strength and commitment to ethical business practices.

Linda Hoitt addressed the section of the White Paper discussing common misconceptions and mischaracterizations regarding FIPS and emphasized that a clear understanding would benefit journalists, financial advisers, distributors, academicians, regulators and others who seek to learn about and, subsequently, educate the public about FIPs.

Joan E. Boros provided an in-depth look at the state regulation of insurance product versus federal and state regulation of securities. She also reviewed Supreme Court rulings which weigh heavily the disposition of investment risk in determining the securities status of a financial product.

NAFA members will receive their own copy from NAFA with their renewal and may request an electric copy from Kim O’Brien. Non-members may request a copy at A webcast of the Press Conference will be available in early February.

Questions or comments call Kim O’Brien at 888-884-NAFA.

Kim O'Brien
Executive Director
415-946-3532 (fax)

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Last Updated: 2/1/2007 6:39:00 PM