The Battle Over Annuity Illustration Rules: Who Wants What (2026 Update)

Where Do Annuity Illustration Rules Stand Now?

Annuity illustration rules are being rewritten, but nothing has changed yet for buyers. Since August, the NAIC’s illustrations working group has moved from debating the problem to drafting fixes. It favors a quick model bulletin as a stopgap and plans prescribed index scenarios in its next draft.

This article covers the background: why regulators reopened the rules, who wants what, and the timeline so far. If you have an illustration in front of you today, start with our guide to how to read a fixed index annuity illustration under the coming rules.

Updated October 13, 2026, with the working group’s September decisions.

Why Are Regulators Rewriting Annuity Illustration Rules?

An illustration projects how a fixed index annuity (FIA) might grow. Regulators worry that today’s projections set expectations most contracts will not meet.

• Returns as high as 27%: regulators reviewed illustrations from about 25 to 30 market leaders. Two-thirds showed at least one product or index above 10% a year, and the highest ran from 16% to 27%.
• Backcasting: Iowa Insurance Commissioner Doug Ommen described illustrations showing an index’s performance “during years before the index actually existed.” He called illustrations that create “unrealistic expectations” unfair and deceptive.
• Anchoring: “The numbers form an immediate expectation,” said Dick Weber of the Life Insurance Consumer Advocacy Center. Iowa’s Mike Yanacheak said consumers anchor on large projected values.
• A patchwork of rules: the NAIC’s Annuity Disclosure Model Regulation (#245) governs illustrations, but only 10 states have adopted it.

Who Wants What in the FIA Illustration Debate?

The working group is chaired by Ben Slutsker of the Minnesota Department of Commerce. Here are the main positions on the record.

• Indexed Annuity Leadership Council (IALC): proposed capping back-tested annual returns at 150% of an index’s realized volatility. It also proposed showing guaranteed minimum values over a “scenario period” at least as long as the surrender period.
• New York Department of Financial Services: proposed capping the return assumed on the options that fund index credits at 1.1 times the carrier’s general account earnings. Its chief life actuary later backed an SEC-style approach using fixed return levels.
• American Council of Life Insurers (ACLI): urged regulators to drop a proposal to show insurer financial strength in illustrations. Its letter said “there is not a direct connection between financial strength and product illustrations.”
• Life Insurance Consumer Advocacy Center (LICAC): proposed that illustrations disclose financial strength, calling a carrier’s rating an “important aspect of the decision to purchase an annuity.”
• Consumer advocates: Birny Birnbaum of the Center for Economic Justice wants no scenario beyond “explaining and demonstrating how the product operates.” Bonnie Burns of California Health Advocates urged testing disclosures with real consumers.

Timeline: How the Annuity Illustration Overhaul Has Moved

1. Early August 2026: the working group entered a “consensus phase,” agreeing in principle on shorter, combined illustrations and standardized requirements.
2. August 11–14: the NAIC Summer National Meeting in Columbus, Ohio. The parent committee had already authorized the group to begin revising Model #245.
3. August 19: comment letters from the ACLI, IALC, LICAC and New York regulators were made public.
4. Early September: Commissioner Ommen pressed the group to speed up, and regulators shared the 10% to 27% return data.
5. September 9: a straw poll favored a stopgap, with a model bulletin preferred over an actuarial guideline.
6. September 16: the group agreed to include prescribed up-and-down index scenarios in its next exposure draft, opening a submission window of nearly two months.

What Could Change, and When?

Two tracks are running at once. A fast, light fix comes first, then a slower rewrite of the rules themselves.

• A model bulletin (the stopgap): insurers could keep showing historical index returns but stop applying today’s caps and participation rates to past years. Illustrations might use a prescribed rate, scenario or range instead, or “haircut” historical results.
• The bulletin’s limit: a bulletin is guidance, not a regulation, so it has no direct enforcement power on its own.
• A revised Model #245 (the long-term fix): standardized scenarios and new formats would go through NAIC adoption, then state-by-state adoption, before carriers change their software.

What This Means for FIA Buyers

Until the new rules take effect, illustrations will keep looking the way they do now. Read them with that in mind.

• Trust the guaranteed column: it is the only part of an illustration the insurer promises.
• Ask how old each index is: years before an index launched are a backtest, not history. See our guide to proprietary index strategies.
• Compare current terms across carriers: caps and participation rates vary widely. Check today’s fixed index annuity rates before you commit.
• Check the insurer anyway: whatever regulators decide about disclosure, an insurer’s financial strength matters. Our annuity company reviews show each carrier’s ratings.

What’s Next for Annuity Illustration Rules?

Proposals are due in roughly mid-November, and the working group expects to resume discussion about two to three months after that. A model bulletin could arrive first. A full rewrite still needs NAIC approval and then state adoption, so buyers should not expect new annuity illustration rules in the near term.

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