Annuity Guaranty Paper Gets State Regulators’ Attention
April 22, 2026 by Allison Bell
Wink’s Moore on the Market: This article confused me.
“A National Association of Insurance Commissioners (NAIC) publication has news for state insurance regulators: They may have succeeded at hiding the existence of the life insurance and annuity guaranty system from annuity buyers.”
(I was always taught that insurance professionals are not permitted to discuss the guaranty system, unless the prospect asks what happens if the insurance company fails?)
“U.S. insurance regulators discourage INSURERS from talking about guaranty fund protection, because they want insurance buyers to help police insurer solvency,” this article indicates. But what about insurance AGENTS?
“Some regulators fear that buyer dependence on guaranty fund protection will create ‘moral hazard,’ by reducing buyers’ interest in insurers’ finances.”
********************Here’s where the confusion comes in.********************
I would argue that the insurance AGENT controls the annuity purchasers’ attitudes as it relates to policing insurance solvency. S/he recommends annuities that they think is “best” for the prospect- whether that be determined based upon the highest credited rate, insurer’s financial strength ratings, or something else. I would assume that the prospect must trust the insurance agents’ recommendations, or they won’t proceed with the sale?
It is also relevant that one of the biggest trends over the past 14 years is startup insurance companies entering the MYGA space with uber-competitive rates, and upon gaining distribution, they transition to focusing on indexed annuities. These companies are typically rated below an A- with AM Best, and some are even unrated.
Such companies’ products ARE selling because their rates are especially competitive. Case in point: we have five-year MYGAs from an insurer with this profile, crediting as much as 6.30% today. This is from an insurance company that uses independent agents to distribute their products. By contrast, a D2C company is only crediting 5 bps more than this on their 5-year product, which doesn’t have a commission because THERE IS NO AGENT.
Perhaps my friends David Blanchett and Michael Finke can help us hash it out? I may even get Michael Guillemette, Ph.D., CFP®to chime in…
These gentlemen posted a working paper version of a study on MYGAs and the guaranty fund association, in 2025. They know their stuff! -sjm
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A National Association of Insurance Commissioners publication has news for state insurance regulators: They may have succeeded at hiding the existence of the life insurance and annuity guaranty system from annuity buyers.
The NAIC’s Journal of Insurance Regulation is informing regulators of that possibility by publishing a paper assessing consumers’ awareness of state insurance guaranty protections.
