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Fixed Annuity Complaints from Consumers Remain Low

Milwaukee, WI (January 9, 2012) – Updated statistics released by the National Association of Insurance Commissioners (NAIC) on December 26, 2011, show that consumer complaints about fixed annuities remained very low last year. NAIC data shows only 84 complaints regarding traditional fixed annuities and only seven complaints concerning fixed indexed annuities.

In addition to company-specific information, the NAIC produces reports combining data submitted by state insurance departments. The NAIC reports provide information about common closed complaints by reason and type of insurance, as well as how the complaints were resolved.

“The National Association for Fixed Annuities (NAFA) is pleased to see the data from the NAIC, as we believe the consumer data further cements the role of fixed annuities as a valuable retirement planning product for consumers,” stated NAFA President and CEO Kim O’Brien.

This information reveals that consumers continue to be pleased with the product and have very few complaints. This information is a stark contrast to the information provided about securities sales in a new article by Kelly Greene at The Wall Street Journal entitled “Boomers Wearing Bull’s-Eyes.” This article goes into considerable detail concerning the 1,241 criminal complaints and cease-and-desist orders reported in 2010 as a result of securities sales. The numbers seem to continue to climb in recent years.

Fixed annuities are the only products that allow individuals to accumulate retirement savings, protect their savings from declining markets and receive guaranteed income for life. These products are provided through a written annuity contract issued by an insurance company.

NAFA’s Advantage Compendium Replacement Survey, November 2011

A survey of annuity carriers reveals that the premium for 62% of current index annuity sales is derived from new money coming from outside of the annuity industry and only 38% of sales involve transferring or replacing existing annuities. The NAFA commissioned study received results from carriers representing 72% of index annuity sales.

Survey Findings:

  • Premium came from existing annuities through Section 1035 exchanges or qualified transfers.
  • The median carrier had 50%1 of their new annuity sales coming from transfers or exchanges of other annuities.

The survey reveals that 50% or less of typical index annuity premium results from existing annuities. This contrasts very favorably with variable annuity and securities sales where it is reported that the vast majority of these sales involves intra-industry transfers.

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1 The reason for the difference is the top selling carriers reported a much lower percentage of sales coming from existing annuities than the others and this skewed the overall percentage. is intended to be a vital tool to understanding fixed annuities and an excellent resource to find answers and insightful information as individuals plan for retirement.

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