In the U.S., insurers will be able to use a new streamlined approach to providing investors with disclosure for variable annuities and variable life insurance contracts.
The U.S. Securities and Exchange Commission (SEC) is adopting a new rule that will allow insurers to use summary disclosure documents with clients to satisfy their prospectus delivery requirements. More detailed information will be provided to clients on request.
The SEC said the aim is to “simplify and streamline” disclosures about variable annuities and variable life insurance.
The regulator said that the changes are intended to improve investors’ understanding of the products’ features, fees and risk. The changes are modelled on the SEC’s similar “layered” approach to disclosure for mutual funds.
“The commission is taking this important step to improve Main Street investors’ understanding of these products,” SEC chair Jay Clayton said in a statement.
“With today’s technology and the benefits of layered disclosure, investors should not have to work through hundreds of pages of disclosure to understand these products’ risks, fees, and features in order to make informed investment decisions,” Clayton added.
Insurers can begin using the new disclosure July 1.