Annuities have historically been a popular retirement investment option. In particular, variable annuities, which combine an insurance policy and mutual funds, can provide tax-deferred retirement savings, upside growth with downside protection and guaranteed income throughout the holder’s lifetime. The aftermath of the financial crisis, however, has led issuers to seek changes to variable annuity products and their terms. Given the volume of variable annuities in the market, such product changes raise the prospect of increased litigation involving variable annuities.
The U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority and the Pennsylvania Insurance Department each have a role in regulating the sale of variable annuities in Pennsylvania. Many individual cases involving variable annuities proceed to FINRA arbitration. Since virtually all brokerage firms incorporate a predispute arbitration clause in their new-customer account documentation, investors that bought variable annuities from a broker are usually required to arbitrate their claims.
