Spitzer Targets Senior VA Sales
By STEVE TUCKEY
National Underwriter News
June 28, 2005
Hartford Financial Services Group Inc. received a subpoena last week from New York Attorney General Eliot Spitzer's office in connection with an investigation into variable annuity sales.
Hartford spokesman Josh King says the investigation will target sales and exchanges of variable annuities to New York residents over 65.
A spokesman for Spitzer's office declined to comment on the investigation.
Sales of variable annuities to seniors have long been on the radar screen of regulators. Just 2 years ago, the National Association of Insurance Commissioners, Kansas City, Mo., approved a model law specifically aimed at curbing the abuses that have arisen in that area.
Birny Birnbaum, director of the Center for Economic Justice, Austin, Texas, said products such as variable annuities are among the most inappropriate for seniors.
They are products with a long-term investment prospect for customers who have short-term cash needs," he said.
In addition, the fact that many of these products have large penalties for early surrenders makes them inappropriate for seniors, Birnbaum said.
Regulators at first attempted to pass a model law aimed at ferreting out unsuitable sales of such products to consumers of all ages. But members of the life insurance industry argued that the states already had sufficient power and that the National Association of Securities Dealers, Washington, also had authority in this area.