Institute Comments on SEC Concept Release Regarding Equity Index Insurance Products

Washington, DC, December 30, 1997 - The Institute has filed a comment letter on the SEC's concept release soliciting comment on the status of equity index annuities and other equity index insurance products under the federal securities laws. The letter takes the position that all equity index insurance products (EIPs) should be registered under the federal securities laws. The letter expresses the view that these products are not eligible for the exemptions for insurance contracts provided under Section 3(a)(8) of the Securities Act, and that they are outside the safe harbor of Rule 151 under that act for certain annuity products. The Institute's position is based on the fact that investors, not insurers, assume the primary risk under EIPs, and that EIPs can be fairly marketed only as securities rather than as insurance products. Accordingly, EIPs present significant investor protection concerns that can be addressed only by regulating them under the federal securities laws, including provisions of the Investment Company Act.