House of Representatives

HB 2437

joint oversight committee on corrections

Sponsors: Representative Poelstra; Kraft

 

DPA s/e

Committee on Financial Institutions & Insurance

DPA

Caucus and COW

X

Third Read

 

 

As Passed the House

 

HB 2437 establishes a joint oversight committee on corrections.

 

Current Status

A strike-everything amendment was adopted in the Financial Institutions and Insurance

Committee to HB  2437 to reduce the minimum guaranteed rate of interest for individual deferred annuities. The Financial Institutions and Insurance committee amendment was adopted in the Committee of the Whole.

 

History

An annuity is a contract between an individual and an insurance company. The individual agrees to pay the insurance company a single payment or a series of payments, and the insurance company agrees to pay the individual an income, starting immediately or at a later date, for a specified time period. Arizona statute specifies that individual deferred annuities delivered or issued for delivery in this state must contain provisions that at a minimum are as favorable to a contract holder as those set forth in the Arizona statute.  Individual deferred annuities that have flexible considerations are guaranteed a minimum rate of interest of three percent per year.  The National Association of Insurance Commissioners (NAIC) in 1976 adopted this minimum guarantee, and the expectation was that interest rates would remain high for some time. 

Last year, the Federal Reserve cut interest rates below 2%, falling under the minimum statutory guideline.  The NAIC has initiated a nationwide effort to reduce the minimum guaranteed rate and to consider a long-term approach to varying interest rates.  The proposed legislation amends state law by reducing the guaranteed minimum rate of interest for individual deferred annuities with flexible considerations to one and one-half percent per year. 

 

Provisions

•                     Specifies minimum non-forfeiture values for individual deferred annuities

•                     Reduces the minimum rate of interest for individual deferred annuities with flexible considerations to one and one-half percent.

 

HB 2437 was amended in the Financial Institutions and Insurance Committee as follows:

The committee adopted a strike-everything amendment with the provisions stated above.

 

 

 

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45th Legislature                       

Second Regular Session            2          March 28, 2002

 

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