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House passes changes to annuity minimums, tying guarantees to federal index with a 1% floor
Summary
House passed HB52 to alter minimum guaranteed interest on new annuity contracts from a fixed 3% to a formula tied to a federal medium-term bond index with an absolute minimum of 1%; sponsors said the change helps insurers manage low-interest environments.
SALT LAKE CITY — House members voted to change how minimum guaranteed interest on new deferred annuities will be set, replacing a fixed 3% floor with a formula linked to a federal medium‑term bond index and an absolute minimum guarantee of 1%.
Representative James Dunigan (spoke on behalf of the bill) said the change, modeled by the National Association of Insurance Commissioners and adopted in 13 other states, aims to give insurance companies relief in a prolonged low-interest environment while still preserving a guaranteed minimum for consumers. Under the proposal the guaranteed minimum would be the lesser of a 3% fixed rate or an index-based rate less 125 basis points, with an absolute floor of 1%.
Members questioned why 1% was chosen as the minimum and whether the change would limit consumer protections. Sponsor and supporters said the floor preserves a baseline guarantee and that existing annuities in force would not be affected. HB52 passed the House and will be referred to the Senate.
