Insurable Interest Canadian Insurance Blog

Two insurance regulatory law specialists say the effort that created the new Colorado life insurance technology unfair discrimination regulation will likely expand to affect annuities. The Colorado regulation will also do more to affect how insurers operate than other state efforts to address concerns about new forms of decision-support technology, the lawyers predicted. Paige Waters, a partner at Locke Lord, and Stephanie O’Neill Macro, an attorney of counsel with the firm, talked about the new regulation of external consumer data and information sources, or ECDIS, in an email interview. What it Means: Colorado’s requirements could have a big effect on how financial services regulators approach artificial intelligence, machine learning, traditional analytical systems and any new forms of technology. The Regulation: The new rules require insurers to set up a governance system for preventing race-based discrimination involving ECDIS. Regulators defined ECDIS to include “credit scores, social media habits, locations, purchasing habits, home ownership, educational attainment, licensures, civil judgments, court records, occupation that does not have a direct relationship to mortality, morbidity or longevity risk, consumer-generated internet of things data, and any insurance risk scores derived by the insurer or third-party from the above listed or similar data and/or information source.” What’s...

Dimensional Fund Advisors is expanding its exchange-traded fund offerings with seven new ETFs, including this week’s listings of its Ultrashort Fixed Income ETF (NYSE Arca: DUSB) and World Equity ETF (NYSE Arca: DFAW). The new funds join the recently launched US Core Equity 1 ETF and upcoming launches of three global fixed income ETFs and a U.S. Large Cap Vector ETF. Dimensional expects its ETF suite to total 38 funds covering global equities, fixed income and real estate by year end. The firm manages about $100 billion in ETF assets and said it has seen meaningful adoption of its ETF lineup. The company, which also offers mutual funds and separately managed accounts, oversaw $634 billion for investors worldwide as of June 30. “We continue to evolve our investment offering to meet demand from financial professionals and add value,” Co-CEO and Chief Investment Officer Gerard O’Reilly said in a release. “These ETFs are another set of tools in Dimensional’s growing lineup, which we expect will meet diverse investor needs across asset classes and geographies.”

When searching for a new solution, advisors hear a common pitch from software providers: “Our technology frees you to focus on what you do best, managing relationships and growing your business.” Many players in the fintech ecosystem tout the ease, simplicity and scalability of their technologies, allowing advisors to spend less time wrangling data and more time serving existing clients and looking for new ones. But for advisors serving ultra-high-net-worth families, the promise of an easy button to manage the complex needs of multi-generational, taxable investors rings hollow. Despite the incredible growth of sophisticated fintech software-as-a-service solutions, advisors are still commonly doing complex and custom work for UHNW families in Microsoft Excel, which was released in 1985.  When we launched Callan Family Office, which serves more than 40 multi-generational families with an average portfolio of $100 million, we recognized that we had an opportunity to bridge  the ultra-high-net-worth technology gap.  From a tech perspective, ultra-high-net-worth families are different from affluent or high-net-worth investors in two important ways. First, they have ownership structures that span multiple generations, multiple investment managers and multiple custodians. Second, they require individualized advice and implementation to ensure that investment and financial plans are coordinated to maximize...

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...