SEC Proposes Tightening RILA Registration

RILAs have grown in popularity in recent years, with sales more than tripling in the past five years, reaching about $41 billion in 2022, the SEC said.

"Investors' returns in RILAs are connected, in part, to the performance of a market index, such as the S&P 500," Gensler said. "RILAs, though, are complex products. … Investor returns often are subject to caps and floors set by the insurance company. Further, features such as these caps and floors may change over time, and investors can experience losses if they withdraw money early."

Given these products' complexity and growing popularity, "it is important that investors receive the information they need — in plain English — to make informed investment decisions," Gensler added.

The proposal would require that RILAs be registered with the SEC "using an amended version of Form N-4, which is the form currently used for most variable annuity products," Jason Berkowitz, chief legal and regulatory affairs officer at the Insured Retirement Institute, said in a statement.

The amendments, Berkowitz said, "are intended to specifically address the features and risks associated with RILAs. Notably, we are encouraged that under the proposal, RILA issuers would appear to be eligible for a limited exception, which is already available to variable annuity issuers, to use statutory financial statements rather than GAAP financials only if the insurer does not otherwise prepare GAAP financials."