LD 509
pg. 35
Page 34 of 183 An Act To Adopt the Maine Uniform Securities Act Page 36 of 183
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LR 441
Item 1

 
Insurance or endowment policies or endowment or annuity contracts,
other than those on which an insurance company promises to make
variable payments, are excluded from this term. Variable insurance
products are also excluded in many states and are exempted from
securities registration in others under provisions such as Section
201(4). When variable products are included in the definition of
security and exempted from registration state securities
administrators can bring enforcement actions concerning variable
insurance sales practices.

 
The Drafting Committee recognized that the decision whether to
exclude variable annuities from the definition of security will
be made on a state-by-state basis. Those states which intend to
exclude variable products from the definition of security should
add the words "or variable" to Section 102(28)(B) so that it will
read:

 
(B) The term does not include an insurance or endowment
policy or annuity contract under which an insurance company
promises to pay a fixed or variable sum of money either in a
lump sum or periodically for life or other specified period.

 
In the view of the American Council of Life Insurers:

 
The brackets around the words "or variable" should be
removed to follow the majority of jurisdictions. Thirty-
seven jurisdictions [including Guam] currently exclude all
insurance, endowment and annuity contracts from the
definition of security. Removal of the brackets around the
words "or variable," therefore, would incorporate the
approach taken in the majority of jurisdictions. The removal
of these brackets also prevents a statutory conflict with
[up to] 48 jurisdictions that grant the insurance
commissioner exclusive jurisdiction to regulate the issuance
and sale of variable contracts. Moreover, this approach
recognizes that the issuance and sale of variable contracts
is comprehensively regulated by the Securities and Exchange
Commission, the National Association of Securities Dealers,
50 state insurance departments, and in the case of group
life and annuities, the Department of Labor. Like all other
financial products, this approach imposes only one, rather
than two, levels of regulation in each state and reflects
the philosophy of financial services modernization.

 
In the view of the North American Securities Administrators
Association variable products should be exempted from
registration, not excluded from the definition of securities:


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