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Committee hears from Prudential on bill to allow contingent deferred annuities in Kansas
Summary
The Committee on Insurance heard proponent testimony for HB 2540, which would exempt contingent deferred annuities (CDAs) from Kansas's standard nonforfeiture law and authorize the insurance commissioner to adopt CDA-specific nonforfeiture rules; Prudential's actuary said the change aligns state law with an NAIC 2020 model.
Eileen, the committee reviser, told the Committee on Insurance that House Bill 2540 would amend KSA 44-102 to exclude contingent deferred annuities (CDAs) from the state's standard nonforfeiture law and give the insurance commissioner authority to adopt rules prescribing nonforfeiture benefits for CDAs.
Why it matters: Proponents say CDAs are structurally different from traditional annuities because the insurer does not hold the customer's assets, so the existing nonforfeiture requirements designed for traditional annuities can prevent CDAs from being offered. The reviser noted the provision mirrors an NAIC model law published in 2020 and that, if enacted, the change would take effect upon publication in the statute book.
Prudential's product actuary, Elijah Ganilla, testified in support and described how CDAs work in three phases: accumulation (fees paid while assets stay with the advisor), withdrawal (contractually permitted withdrawals), and payout (insurer begins lifetime payments once the account is depleted). "CDAs protect customers from the risk of outliving their assets," Ganilla said, arguing that exempting CDAs from the current statute and allowing the Department of Insurance to "craft protections specific to CDAs" would permit Kansas consumers access to an additional retirement tool.
Committee action and record: The committee recorded a written proponent from the American Council of Life Insurers and the oral testimony of the Prudential representative. No neutral or opponent testimony was offered and the chair closed the hearing on HB 2540; no committee vote on the bill was recorded during this session.
What's next: The committee closed testimony and moved on to the next bill. If the committee later advances the bill, the reviser said the statutory language would become effective upon publication in the statute book.
