‘Insurers offering agents rewards to sell annuities’
COLUMBUS-based nationwide was among the insurers asked to provide information to Warren’s office as part of the investigation, but it was not revealed whether the company was among those that admitted to using a rewards program.
Most of the nation’s biggest insurance companies investigated by U.S. Sen. Elizabeth Warren have acknowledged providing rewards and inducements such as expensive vacations to agents in exchange for sales of annuity products, according to a report that Warren’s office released.
The Massachusetts Democrat launched an investigation into 15 major annuity providers in April amid concerns about “kickbacks” they offered to brokers who peddle products to retirees, and 13 admitted to such practices.
Columbus-based Nationwide was among the insurers asked to provide information to Warren’s office as part of the investigation, but it was not revealed whether the company was among those that admitted to using a rewards program.
“While Nationwide is not mentioned in today’s report, we were among the 15 leading annuity companies that received a letter from Senator Warren’s office in April,” said Dace de la Foret, Nationwide’s public relations director.
“The letter inquired about bonuses and awards offered by those insurers for sales of annuities. Nationwide’s practice is that any program offered be compliant with current rules and regulations,” de la Foret said.
Warren’s report said a legal loophole allows sales agents to “steer customers into complex financial products that will earn the highest rewards, perks and prizes for the advisers — even if they are bad options for their customers.”
In return for annuity sales, agents are rewarded with cruises, trips to places such as the Bahamas and Aruba, golf outings, iPads, jewelry and other items, the report found.
The report said: “Many stories have surfaced about seniors being sold high-cost annuities, losing tens of thousands of dollars of their nest eggs on management costs, commissions and other fees.”
Warren said in the report: “Companies shouldn’t be allowed to offer expensive vacations, prizes and other kickbacks to agents in exchange for selling costly, second-rate investment products to unsuspecting customers.”
The report was based on responses from 15 companies to letters asking for information on whether they offered noncash incentives.