IRI ENCOURAGES SEC TO ADVANCE CONSUMER-FRIENDLY INFORMATION DISCLOSURE

Posted on March 15, 2019

IRI Comments re VA Summary Prospectus

Group Shares Agency Goal to 'Future Proof' Regulation

WASHINGTON, D.C. - A more rational, useful, consumer-friendly disclosure of essential information about variable annuities using 21^st century technology will better serve investors than today's required book-length paper versions delivered by US mail, according to the Insured Retirement Institute (IRI).

IRI, the leading retirement income trade association, has waged a 10-year effort to make variable annuity disclosures more consumer-friendly for consumers while still maintaining access to additional information, if requested. IRI filed comments today with the Securities and Exchange Commission (SEC) on the agency's proposed rule to create a variable annuity summary prospectus.

'We commend the Commission and its staff on the thoughtful approach to the matters covered in the Proposal and their willingness to engage the industry in constructive dialogues and meetings ever since IRI first submitted its variable annuity summary prospectus rulemaking petition over a decade ago,' wrote IRI President and CEO Wayne Chopus.

Full statutory prospectuses for variable annuity products can range from 150 to 300 pages and contain language that most ordinary investors would find difficult to understand. As a result, full prospectuses are rarely used by most investors, with less than 3% of investors saying they always read some part of the prospectus.

IRI recommended that the SEC adopt the 'access equals delivery' approach to variable contract and mutual fund prospectuses, consistent with the goal of 'future-proofing' the proposed rule to ensure it remains relevant as technology and communications methods evolve.

Under this approach, an annuity provider would satisfy its prospectus delivery obligations under federal securities laws for a variable annuity or variable life insurance contract by making the statutory prospectus available online.

Additionally, the IRI comments request the agency to streamline regulations to allow insurers to register certain non-variable insurance products using the same forms as variable products rather than forms designed for equity offerings, which require far more information such as executive compensation and other items that focus on the operations of the issuer as opposed to the features of the insurance product.

IRI also provided input on codifying certain agency practices providing relief from the annual registration updating requirements for discontinued variable contracts.

'We are greatly encouraged by the SEC's proposed summary prospectus rule and remain confident that the final product will result in access to more rational, understandable and useful information to consumers,' Chopus said. 'This rulemaking also presents an opportunity to streamline certain regulations that merely add costs with little to no consumer benefit.'

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Contact: Dan Zielinski

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