Complex Products

More complex products sold to individual consumers (e.g., universal life policies) tend to generate more market conduct problems than simple products (e.g., term life insurance).

2003 0701 - Report - For NCOIL - The Path to Reform – The Evolution of Market Conduct Surveillance Regulation, by PricewaterhouseCoopers and Georgia State University - 117p

  • Michael Lovendusky, ACLI ...said the ACLI work group thinks that most confusion for consumers involves complex products like universal life, and not Simple products like term life.
    • He said consumers are mostly confused about options, guarantees and riders.
  • The ACLI work group was considering asking the life insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.

2016 0403, NAIC Proceedings - LIIIWG - Life Insurance Illustrations Issues Working Group, Conference Call

  • One important lesson of the recent crisis is that as financial products and services proliferate and become more complex, they often fall through the regulatory cracks. (p16)

--- Testimony of Ann Yerger, Executive Director - Council of Institutional Investors - 106p

2009 0729 - GOV (Senate) - Protecting Shareholders and Enhancing Public Confidence by Improving Corporate Governance, (CSPAN) Improving Corporate Governance, Jack Reed (D-RI) - [PDF-252p, VIDEO-CSPAN]

  • 2018 0926 - GOV (House) - Oversight of the SEC’s Division of Investment Management, Bill Huizenga (R-MI)
    • [PDF-43p, [VIDEO-YouTube - 01:40:14 - Starts at 31:00]
    • SEC - Dalia Blass, Director, Division of Investment Management - Testimony - p26-43
      • (p36) - Variable Insurance Product Summary Prospectus
        • Investors in variable annuities and other variable insurance products often have to navigate a complex set of disclosures about the variable contract and underlying investment options when deciding whether to invest.
        • The Division is considering a recommendation that the Commission propose rules designed to provide investors with more user-friendly, layered disclosure about variable insurance products.
        • Variable insurance products are generally more complex than other retail investment products, like mutual funds, because they combine both investment and insurance features.
        • In addition, the products typically offer a number of underlying fund investment options that have their own fees, and often include a variety of optional features, like living benefit riders that have additional charges.
        • The Division is considering whether to recommend a new summary prospectus that would help investors better understand these products' costs and risks, and also produce cost savings that could be passed on to investors. 
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