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Allianz Life Thinks Indexed Annuities Might Be Dropped From DOL’s BICE

Allianz Life is the top seller of fixed indexed annuity products. Last year, Wink’s Sales & Market Report showed that they sold $53 billion of indexed annuities, which was a 33% sales increase from the year before. Allianz Life Insurance of North America is a subsidiary of Allianz SE, a German company. They are headquartered in Minneapolis. Allianz Life held 14.5% of the fixed indexed annuity market share last year as the top seller. The Allianz 222 indexed annuity has been the top selling fixed indexed annuity for four quarters in a row, starting with the first quarter of 2015. Some of their other popular indexed annuities are the Allianz 360 and 365i, Essential Income 7, Core Income 7, Signature 7, Master Dex X, and the Endurance Plus. This information came from the Insurance News Net article, “Allianz: DOL Might Pull FIAs Out Of BICE,” by Cyril Tuohy.

As the top seller of fixed indexed annuities, Allianz Life has a lot to consider after the DOL included their best selling products in the BICE requirements. Indexed annuity products were not originally expected to be held to the same requirements as variable annuity products are now. The Best Interest Contract Exemption rules add a strict level of disclosure and require insurers to have a signed best interest contract with any clients buying these annuities. The inclusion of fixed indexed annuity products in this so-called Conflict of Interest rule was a punch in the gut to many people selling indexed annuities. But Allianz Life’s CFO, Dieter Wemmer, thinks there is a good chance that indexed annuities might not be included in the new requirements after all. Wemmer said that it’s possible the DOL will end up excluding indexed annuity products just as quickly as they added them to the BICE requirements.

Even if they remain under BICE guidelines, Allianz Life said that it won’t necessarily be a bad thing. Wemmer said that they don’t actually think that the fixed indexed annuity industry will shrink at all. Allianz believes that their proprietary sales channels will help increase the volume of indexed annuities sold. The independent agents will have the hardest time selling fixed indexed annuities under the new rule because a financial institution has to be the one to certify that the contract is in the best interest of the annuity client. Insurance company executives have said that it isn’t clear if the DOL financial institution requirement means a manufacturer or distributor of the insurance contract has to sign off. Independent agents can either sell directly through an insurance company or through an independent marketing organization who reports to the insurance company. Insurance companies have more control over proprietary distribution networks, so they can be confident that annuities sold through this channel meet the BICE requirements.

Regardless of the channel in which fixed indexed annuities are sold, Allianz Life’s Dieter Wemmer thinks that there will be more to the DOL fiduciary story than we already know. Top indexed annuity seller Allianz Life believes there is a good chance that fixed indexed annuities will be removed from the DOL’s BICE requirements.

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