Oct 06, 2026
Peter Gould, a longtime retirement-industry professional and consumer advocate, joined us recently to discuss risks within the life insurance industry from the perspective of policyholders and retirees. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Hello, everyone. Welcome. I’m Teddy Downey, Executive Editor here at The Capitol Forum.
Today, I’m pleased to be joined by Peter Gould, a longtime retirement industry professional and consumer advocate. He spent 40 years working in the retirement plan industry. And as a retiree and holder of several annuities, he began independently studying life insurance regulation. And he became increasingly focused on risks facing policyholders that he believes are not always well understood by consumers, insurance agents, regulators, and others. He now regularly submits detailed public comment letters to the National Association of Insurance Commissioners on issues involving insurance regulation and consumer protection.
Peter, thank you so much for doing this today.
PETER GOULD: Hey, Teddy. Thanks for having me. I will admit that I am definitely the least common denominator and usually the guy on the wrong side of every pay wall. So, thanks for having me.
TEDDY DOWNEY: And maybe we could get started, you could tell us about your journey coming into this issue of insurance regulation and how do you start being concerned?
PETER GOULD: Sure. Well, after saving for retirement for 40 plus years, we had to think about decumulation and how we’re going to have a retirement income from that. And that’s the tricky part.
I wasn’t really looking for a set it and forget it kind of thing. Because I’m more of a trust and verify guy. But I was interested in something, set it, monitor it, and then not worry about it solution, for retirement income I couldn’t outlive. Because I’d rather be having fun in retirement or hanging out outside on the tractor. Our 401k plan had a lifetime income option where you could direct funds to a variable annuity bucket that could be rolled out to an IRA at retirement. And the pricing was really attractive and there were no surrender charges.
So, I really liked the upside of equity separate account funds with downside protection from a guaranteed lifetime withdrawal benefit or GLWB. So, I got pretty excited about that stuff. It seemed like it’d be the perfect solution. So, initially we allocated 72 percent of our savings to VA’s, about half through the 401k and another half outside to another carrier. And I thought I was doing great, really on top of things, checking the insurance ratings quarterly with the four major rating agencies. And I was going the extra step and set up Google alerts on each company.
So, I really felt I was on top of this. Didn’t take long for me to lose my undeserved sense of self-confidence after reading some articles by Kerry Pechter in the Retirement Income Journal about the Bermuda Triangle of insurance. So, I’ve got to blame Kerry for my dive down this rabbit hole. I started to understand that maybe this wasn’t such a great idea and maybe things weren’t as rosy as I thought. And since that time, I’ve read a lot of articles, viewed webcasts and podcasts and have had the opportunity really made the opportunity to correspond and talk with a lot of industry experts who, I have to say, have been awesome and kind enough and generous enough to share their time and expertise with me.
TEDDY DOWNEY: And so, what did you learn about the Bermuda Triangle of insurance that put you down this path? Like what were some of the core things? And then maybe we can talk after that about some of the other things that really alarmed you.
PETER GOULD: Sure. Well, the Bermuda Triangle articles made me think about counterparty risk, which frankly was something I really had not considered. That was totally off my radar. And it’s something, as I read more about it, I came to realize that, certainly under statutory insurance accounting, insurers get equal credit for reinsurance regardless of the quality of the reinsurer. And many of those reinsurance treaties are not at arm’s length. They’re with captives or affiliates. And that really raised doubts in my mind about the safety of our annuities.
So, I started digging in. And with annuities and life insurance and long-term care insurance, you’re really protecting against long-tailed risk. I’m paying my premiums upfront. So, I want to make sure that the claims that are going to be way in the distant future, if ever, are going to be paid. And long-tailed risk just lends itself to being conned. It’s the greatest setup to get conned when you’re paying upfront and you wait a long time to see if it actually pans out.
So, that got me looking into state guarantee associations specifically my state, Indiana State, SGA and what exactly it’s going to cover on our annuities. And I was especially concerned for later on in the life of the annuity, after I’d exhausted the separate account of these variable annuities and the GLWB, the lifetime benefit, was provided solely through the insurer’s general account.
So, I started out by speaking with folks at my state insurance commissioner’s office, and they referred me to the Indiana State Guarantee Association. Well, I called there. And I actually spoke with someone who was somewhat knowledgeable, but he wasn’t knowledgeable enough to answer any of my questions about specific coverages and what happens later on in the life of my annuity.
So, I said, okay. Why don’t you give me a list of your board members and I’ll reach out to them? And he refused to do it. Well, that raised my hackles. I went back to my state insurance commissioner’s office, got the list. They’d only give me the name and company.
So, I had to Google them all. And then I emailed them all and said, okay. I’d really like to understand what you’re doing for me in terms of my protection here. About three months later, I got an email from the SGA’s outside law office basically telling me to get lost.
So, following that, I dug into the NOHLGA, the National Organization of Health and Life Guaranty Associations. And I got some semi answers, but nothing that really allayed my concerns.
At the same time, I was interested in what happens with distressed insurers. And that’s where I really got involved with NAIC because I was curious how a receivership and a liquidation would be handled and how that would affect me.
And one of the first things I did was inquire about postmortems on these regulator actions, whether it’s a receivership or a liquidation. I was curious about where I could find the postmortems. Because certainly you would think that someone would learn from past mistakes or past problems.
So, when I approached the committee in charge of that and asked about it, I said, where would I find those? And they said, we don’t do them. And so, I did propose that they do reports that at least provided this information that they could use and stakeholders could use. But I didn’t get any uptake on that.
And then the other thing they do is to maintain a global receivership information database, but it was very limited. Now that’s available to the public, but it had very limited information. I proposed expanding that to discuss how it affected policyholders in each case and that kind of thing. And I was told that the closest thing available to that is an after the fact AM Best insolvency report that would have cost me over 500 bucks. And that obviously was not acceptable to me.
Now, I’ll tell you, when I got to that point, we sat down and re-evaluated our allocation to the VA’s. And although I still like them I love the concept we decided it would be prudent to reduce our allocation from 72 percent to 15 percent. And I’m comfortable at 15 percent. I still have skin in the annuity game, but I’m a little bit wiser.
TEDDY DOWNEY: So, you are probably the most motivated customer, maybe ever, to learn about the risk in your annuities and then just trying to understand what would happen in a resolution process. And you still couldn’t get answers. So, it strikes me that this idea that there’s not only not transparency, but it’s actually is it basically impossible to find out what would really happen?
PETER GOULD: Yeah. So, to give you an example, let’s say that I’m getting $1,000 a month from an annuity. And let’s say at that point I’m age 80. One of my questions is, I understand that there’s a limit on annuity coverage up to X dollars. How would you calculate the present value of that $1,000 a month? Because I’d like to know if my guaranteed benefit is fully protected, or what would happen? And that’s a basic question. That’s not rocket science. That’s just basic actuarial math. And when nobody could answer that question, it told me that I needed to protect myself.
TEDDY DOWNEY: And why do you think no one can answer that?
PETER GOULD: Boy, that’s a good one. I think to some degree, in your podcast with Andrew and Pranjal, where they talked about the guaranty associations I forget what they called it, moral, what?
TEDDY DOWNEY: Moral hazard.
PETER GOULD: Moral hazard, yeah. I think there’s a fear of moral hazard. So, nobody wants to talk about it because then people will rely on it. And my thought is, if you’re going to be a backstop, be a backstop, and preferably a funded backstop, that can really backstop my policy.
TEDDY DOWNEY: Yeah, it’s also like, one thing is providing an actual guarantee and being able to do that and having a process that works. The other thing is you made this point earlier, I think. You’re not distinguishing from a healthy, or from insurers or reinsurers who are doing very risky things with their assets, for not being very prudent with their assets. Really, the backstop should really be separate.
Someone should be policing this riskiness, risky behavior. Not, well, we’re going to make this backstop ambiguous, so as to not encourage risky behavior. I mean, if you look at banking regulations, it’s not confusing what the FDIC would do or step in. I mean, there is some uncertainty, obviously, around uninsured deposits. But those are two separate exercises.
PETER GOULD: Exactly. One is the financial backstop of the system, FDIC or SGAs. And the other is the actual regulation of the system and the systemic risks. Part of the problem is the regulatory system that we have. And I know that’s something we’ll cover later. But I think we all need to be aware that the insurance is covered under a state regulation system. And state regulators are outnumbered. They’re outlawyered. They’re out financial engineered. They’re out-actuaried. And they’re out-thunk by the insurers who have what are seemingly unlimited resources. So, it’s a real mismatch between the resources available to regulators and those being regulated.
TEDDY DOWNEY: Yeah, it’s not even close in terms of money and resources and personnel and creativity.
PETER GOULD: Exactly.
TEDDY DOWNEY: Another question I have for you, just because you’ve overseen this industry for a long time, or you’ve kind of been aware of it for a long time.
PETER GOULD: Well, actually, just two or three years.
TEDDY DOWNEY: Okay, just two or three years, okay. But are you only familiar with this as a recent because you were a retirement industry professional before, correct?
PETER GOULD: Yeah, for 40 years. This was new stuff to me.
TEDDY DOWNEY: Yeah, exactly. I think that was what I was trying to get at. It’s like, when you started in your retirement career you mentioned that it’s easy setup for a con. But when you started in this industry, that wasn’t going on, to your understanding. How have things changed between when you started off and what you see now?
PETER GOULD: Boy, I think and some of the other people that you’ve had on and will have on can better address the history of the industry. But I think the first major implosion that I was aware of through retirement plan involvement was probably the Executive Life situation. And certainly, AIG would have been an almost in 2008.
And what so many of the people who are really deeply into this on a professional level are saying is, we’re seeing a lot of things now that resemble the buildup to the great financial crisis. I think Nick alluded to that and others that you’ve had on the podcast. It has gotten worse and the amount of money being offshored and the amount of investments going to private investments has grown exponentially.
TEDDY DOWNEY: Yeah, it does seem very different from let’s say 40 years ago or so. And what are some of the specific red flags policyholders and retirees should look out for that indicate they’re insured, maybe at risk of default?
PETER GOULD: Well, again, being on this webcast, as I was telling Anna before, being on this webcast finally motivated me to get my act together and put some stuff up on a website. So, if other people are interested in this, at least they’d have a place to start. I don’t get any influencer compensation. It’s just a dumb, plain website, www.petergould.com.
But one of the things that I put up there that I thought was important came from a comment letter that I wrote to NAIC about the annuities buyer’s guide, which is being updated as we speak. That’s a project in process. And one of the concerns that I had about the buyer’s guide is that there was nothing in the August 3rd draft that really addressed the risks that policy owners take on by buying an annuity or an insurance policy. So, if you want, I’ll run down the 13 things.
TEDDY DOWNEY: Yeah, yeah, let’s do it, let’s do it.
PETER GOULD: Okay. And there is more detail on the website and the comment letter. The first thing is how to choose an insurance agent. You need to get somebody who knows what they’re doing. How to check an insurance agent’s record for licensing status and violations. How to evaluate the financial strength of an insurer and compare it to other insurers.
And with these rating agencies, you need to be aware that ratings can be affected by lawsuits. And the perfect example of that is ACAP suing AM Best because they didn’t like the downgrade. How to check for complaints against an insurer.
This one’s a biggie, number five. Who owns the insurance company? The policyholders, a fraternal organization, shareholders via publicly traded stock or shareholders via private equity, and why this matters. Because it does matter, I think.
Number six is absolutely essential. Why regular ongoing monitoring of the insurer’s financial strength and the performance of the policy is important. You cannot set it and forget it. You do that at your own peril.
Another one, annuities are not covered by FDIC insurance. And Teddy, for my money, that ought to be in 16-point print on anything that’s given to a consumer by an insurance company. Whether it’s a brochure, whether it’s an application, whether it’s a buyer’s guide or an illustration, it ought to be on every page.
The same thing if somebody is considering a policy that exceeds the state’s SGA coverage limits, that ought to be in 16-point print on everything too. They need to know that.
TEDDY DOWNEY: Just to stay on those two things for a second. It seems the reason is because the guaranty associations don’t appear to be sophisticated enough to actually resolve the failure of a large insurance company and be able to really honestly guarantee it the way that the FDIC would for a bank up to $250,000 in deposits or what have you. I mean, it’s almost like (a) you need to know that there’s a limit on what is guaranteed. But also, the guarantee is not nearly to the same efficacy of what we would have in a bank. Am I overstating the problem?
PETER GOULD: No, I think you nailed it. We’re really going to see this play out with PHL Variable Life that has a $2 billion hole. I think as that plays out, it’s going to be interesting to see how policyholders are treated and how quickly they’re made whole, at least to the state guaranty association caps.
TEDDY DOWNEY: And one thing that isn’t really talked about as much, but obviously you would have a resolution, right? And what happens with the non-guaranteed obligations? What does the industry say about what will happen to that money? Like, oh, well. Because I think we spend so much time on the guaranteed portion, which already is not really guaranteed because of the problems in the guarantee process and regulation. What about the rest of your plan?
PETER GOULD: Okay. Well, I think it extends even further than that. And if I could, I’d like to step it back and contrast a bank failure to an insurer failure. So, let’s say my bank fails and I have deposits at that bank that are below the FDIC maximum coverage. If that bank fails, it’ll close on a Friday and on Monday or Tuesday, Wednesday at the latest, my money’s going to be fully available at a different bank. That’s just the way that system works. I don’t think it’s ever failed to operate that quickly for somebody who’s within the FDIC coverage.
With an insurance failure, yes, the insureds may get money back up to the point of coverage. And that may take a while to get that. But the other aspect of that is that they’re going to lose the coverage that they may lose the coverage when they most need it. And they may be uninsurable whatever the risk is, long-term care, life, or lifetime payments that may not be insurable anymore.
So, it’s a big deal. And even when it’s not a liquidation, but a rehabilitation where asset blocks are sold off to other insurers who pick up those guarantees, those can be reformed. So, maybe what was guaranteed before is less guaranteed, or there’s a lower amount, things can change. So, what I signed up for may not be what I can get.
Now, to your question about the folks over the limit and I’ve been involved in discussions with people who are involved with PHL it’s anybody’s guess what’s going to happen with the amounts that they have in excess of the state-guaranteed limits. That will probably be just the general creditor pot.
TEDDY DOWNEY: And then I want to get to the rest of your list here. But just in terms of, we’ve got policy makers that listen to these episodes as well. The vulnerability of these customers, I mean, is there any doubt in your mind that there would be if there were one or more major insurance company failures in this ecosystem that there would be a bailout of the or there would be at least a movement to bail out the policyholders so that they get that money? Not to create moral hazard necessarily, but just to give a sense of how problematic from a societal standpoint it would be to let these retirees just not have any money for a long period of time and a lot of uncertainty should one of these companies fail?
PETER GOULD: Right. I would hate to think that they wouldn’t be bailed out, but I wouldn’t bank on it. If we look at what’s going on with Mark Walters and Delaware Life and his companies, that impacts a broad swath of policy owners. A lot of people involved in education have annuities with his companies. I think they might even have an exclusive marketing arrangement with one of the educational associations.
So, yeah, these reach these are big. And we haven’t even broached the possibility of an insurer who has taken on a pension risk transfer failing, and that would just dwarf PHL and all these others.
TEDDY DOWNEY: Well, now I’m interested. What would happen if one of those fail?
PETER GOULD: Well, remember with the pension risk transfer, the participants in the plan, the workers, really have no say in that. This is a totally unilateral deal made by their employer, or their former employer, to shift the responsibility for their pensions to an insurer. So, basically, they get shoveled into a group annuity without any say, and they have no options.
TEDDY DOWNEY: And they’re being also shifted from the Pension Benefit Guaranty Corporation over to the state regulators as well, correct?
PETER GOULD: Correct, correct. So, they forego the PBGC. They forego their pensions being supported by a diversified portfolio. And they’ve gone from a diversified portfolio supporting that monthly pension to a nondiversified one-source insurer. So, when that fails, there are two types of group annuities. There are allocated annuities. And under the SGA system, each plan participant is entitled to the full limit. So, if we had a $12 billion DRT annuity crash and burn, that would be a systemic problem.
TEDDY DOWNEY: Wait, I’m not sure I followed you fully there. So, what is guaranteed in those pension risk transfers?
PETER GOULD: So, there are two types of pension risk transfer annuities. There’s what’s called an unallocated contract. An unallocated contract has a $5 million per contract guarantee.
TEDDY DOWNEY: Okay.
PETER GOULD: Then there are what’s called allocated contracts where each individual has a certificate under that contract. In the allocated contract scenario, each participant is entitled to SGA coverage up to the state maximum.
TEDDY DOWNEY: Okay, okay.
PETER GOULD: So, that’s a big number.
TEDDY DOWNEY: Yeah, but not more than what your individual policy is guaranteed typically.
PETER GOULD: Right. But that’s something that I would doubt that any SGA has modeled or baked into their calculations, if they even do them, as to what their liabilities might be.
TEDDY DOWNEY: I’m almost more concerned for the up to $5 million per plan because then the policyholders are losing more. It’s like my concern is almost the opposite in some respects. Because, all right, the guaranty fund, ostensibly the industry and taxpayers are on the hook for whatever the maximum is per retiree.
PETER GOULD: Right.
TEDDY DOWNEY: Whereas, if it’s a big plan and you only get up to $5 million per contract, the retiree’s just SOL.
PETER GOULD: Yeah,.
TEDDY DOWNEY: But, I mean, obviously, scary both ways, if people aren’t doing the work to make sure they have a situation where they can absorb all that risk.
PETER GOULD: Right, exactly.
TEDDY DOWNEY: Now, we were at the point I interrupted you to go on this tangent. We were earlier talking about how “annuities are not covered by the FDIC” should be in 16 point print. And then let’s go through the rest of your list. I want to go back to the list, what’s after that.
PETER GOULD: The next point is just that state guaranty associations may not restore full policy benefits when an insurer fails, and that there are often delays in payouts.
The next one is the dangers of insurance company failure and its effect on guaranteed benefits. So, you may think that SGA will step in and make everything right. But if you’re living on guaranteed benefits, maybe not. So, that’s a concern.
The next one is huge and is totally unknown by most people. And that’s the fact that state regulators grant permitted practices that allow insurance companies to sidestep requirements that would otherwise protect policy owners. And we see this everywhere.
TEDDY DOWNEY: Let’s stay on this. Because this I find particularly appalling. A state insurance regulator has a rule or a law that they’re supposed to follow to prohibit certain conduct, certain risky conduct, by the insurance company. And then the insurance company comes to them and essentially says, please allow me to break this rule.
And more often than not, you just get the regulator to say, sure. Okay. We’ll let you break this rule. Like when you ask them, why did you allow that? — I just can’t get my head around the excuses that they’re giving. It’s just like, well, they seem fine. I mean, we trust the company. It just doesn’t make any sense to me that they permit this type of stuff.
And so, I’m curious to get what have you seen? And what’s your reaction to what the reason is for the state regular to allow for these permitted practices? I mean, they’re calling it. But really like exceptions to all of their own rules. That’s how I think about it.
PETER GOULD: It’s regulatory arbitrage, plain and simple. That’s what it is. And what this has done as I think a number of the other speakers have mentioned, certainly Nick Nemeth is that this has caused a race to the bottom. So, in pursuit of attracting life insurance businesses to the state, you go lower and lower and lower and get more and more and more, to the detriment of policy owners.
On my little insurance resources compendium, I cite PHL Variable Life, which is just a textbook case for this. In that case, the regulators actions one of the big contributors to the fact that there was no reinsurance was that the Connecticut commissioner granted a permitted practice so that PHL’s captive reinsurers would not be subject to cashflow testing. Like you said, whatever. We trust you.
TEDDY DOWNEY: It just doesn’t make any sense though. Like, why do you care this much about the business being in the state? I mean, like, you’re a regulator that is there to protect retirees. I mean, this idea that they somehow have become like business attraction regulators, I don’t understand how that is there anything to how that happened? Like, are there a lot of jobs in these retirees? Don’t you have enough life insurers already? Aren’t there enough annuity companies in your state already? I mean, shouldn’t there – it seems like there’s probably enough in Vermont. Like, what do you need more for?
PETER GOULD: Well, certainly that would be an argument. But I think, Teddy, if you follow the money, that would help us understand it. So, there are contributions given, concessions given. And a few people have written about the revolving door where regulators go to industry, and that there are any number of reasons why the consumer comes last. And we need people who don’t park their ethics at the door to really be watchdogging in this stuff. Now, do you think I don’t want to paint with a broad brush though.
TEDDY DOWNEY: Yeah, yeah.
PETER GOULD: Because I’ve been on calls with the NAIC, with their staff, with the commissioners and their designees, and I do think they care about consumers. But I think they get detached. So, eventually we’re a little less close and we’re more of an abstract concept. And I’ve got to tell you that the insurance lobbyists are embedded deeper than intestinal tapeworms with those guys. I mean, they get — what I would say is an exceptional amount of consideration and deference on these calls and in these discussions.
TEDDY DOWNEY: I want to get to this Elizabeth Warren letter in a second. Do you think that this lobbying and state insurance relationship, that close relationship that you just mentioned which sounds very problematic, should be a focus of law enforcement at the state level or federal oversight resources? Let’s say Congress which looks like Democrats could potentially win, maybe you would have Elizabeth Warren, Senate Banking Chair. Should that relationship be more closely examined, whether or not there’s corruption or favoritism or undue influence? Do you think that would be important to investigate for law enforcement or members of Congress?
PETER GOULD: Well, I think it’s important, number one, to build trust with the consumer. Although, at this point, I don’t think consumers have any clue. So, short of that, yeah, I think it’s important to have that. I think oversight is important. And there’s a great resistance to any kind of federal oversight in this area.
TEDDY DOWNEY: What about state? I mean, I hear this a lot, but I don’t then see those people saying, well, yeah, the state AG. What about the state AG? Could the state AG throw a few resources to going and checking out whether or not there’s any kind of corruption related to cons? I mean, you mentioned cons. You mentioned super close relationship between lobbyists and state regulators. It’s like, okay. It shouldn’t be federal. But then can we have the state AGs take a look?
We have state AGs on these conversations all the time. Should they be spending some resources, particularly if the feds people don’t want them looking at it? Or maybe the federal government can send some money for law enforcement to the states to be policing this.
It strikes me that someone I mean, this relationship between the lobbyists and the state regulators needs someone to poke around. I mean, I’m just listening to you and the language that you’re using. It seems dangerous not to do that.
PETER GOULD: I think that’s merited. But going back to the permitted practices, I think what needs to happen is just the whole use of permitted practices needs to be reined in. There may be a legitimate reason to make an exception for some specific case that protects policy owners. But the frequency and magnitude of the way permitted practices are in effect now is just scary to me.
And I don’t know that it’s I just think the whole atmosphere encourages it. I don’t know that it’s a corruption thing or that kind of thing. I just think some of it is a function of the insurance industry being so far ahead of the people regulating them.
TEDDY DOWNEY: Yeah, there is obviously a way to get a change in the rule. You can lobby to change the actual rule. Instead of having all these exceptions to rules, just change the rule. I mean, the rules are there for a reason. You want to change the rule. You can lobby to change the rule. It strikes me as absurd that you would get it’s not just that it’s like an exception. It’s some of these exceptions are effectively allowing for total perversion of the rule. It’s not like a marginal, like, well, you’re just a little outside. You’re doing the exact opposite of the intent of the rule. Right?
PETER GOULD: Right.
TEDDY DOWNEY: The rule is to create transparency and you’re doing something to make this whole ability to see do you have enough assets to support your obligations completely opaque?
PETER GOULD: Exactly. So, another example of this kind of permitted practice would be a state regulator granting a permitted practice to an insurer to say that maybe a subsidiary or an affiliate will not be treated as an affiliate for accounting purposes, which is huge.
TEDDY DOWNEY: Yeah, yeah. I mean, yeah, of course, it’s going to be much riskier if you’re an affiliate than an independent arm’s length arrangement in which there are no conflicts of interest and weird incentives when you the incentives. The incentives, if they’re independent, arm’s length agreements, are completely different than if you’re captive or controlled by the same company.
Yeah, I mean, I don’t get to go just statebystate and ask, hey, can I get an exemption from libel law so I can just lie in my articles? I mean, it’s just so absurd if you just think of other industries that would try to get these kinds of exemptions from the rules and the laws.
Now, we do have this recent letter from the NAIC written in response to Senator Warren’s request for information around what’s going on in this ecosystem. What was your reaction to the letter?
PETER GOULD: Well, I chuckled. But if you really want an in-depth pointbypoint analysis of it, Nick Nemeth did an awesome job. And I would recommend looking at his Substack. It’s just a phenomenal response to the NAIC letter. It just lays it out, clear as can be, what was wrong with that response.
TEDDY DOWNEY: Yeah, and I know we pointed this out, I think, in one of our pieces recently. Some of the same regulators who are involved in some of the most egregious examples of these permitted practices that you just mentioned are signatories to the letter. You really just kind of can’t make this stuff up.
PETER GOULD: Oh, yeah.
TEDDY DOWNEY: But again, was there anything in that? I mean, obviously, Nick Nemeth, a friend of The Capitol Forum, was on the podcast earlier. Anything in particular that he wrote that you want to mention or that stands out to you as alarming or worth highlighting here?
PETER GOULD: There were a few things. I mean, Nick really called out the permitted practices. And another thing that he called out as well as some of the other panelists you’ve had have been the valuations. Just the not having accurate valuations of the assets and sometimes liabilities on the balance sheets of insurers. I think those were some really good points.
I wanted to give just a few, three, four more things. Wait, three more things on my list, if I can. And this one I think is really key. When an insurance company fails, the safety of your policy depends entirely on whether your or the safety of your money depends entirely on whether your funds are invested in the insurer’s general account or in a separate account.
And what I mean by that is, if you have a variable universal life policy or a variable annuity, the guaranty portion within that contract is backed up by the insurer’s general account. But the invested money is in a separate account that is not available to the general creditors of the insurer.
So, if we go back to PHL Variable Life, if I had a million dollar annuity, even as that company went into rehabilitation, I still had the ability to withdraw my million dollars. Unlike the other contract holders. So, it’s key to understand that. And that’s a big advantage that the variable products with a separate account have over whether it’s a traditional policy, a RILA or a fixed indexed annuity, all of which are invested in the insurer’s general account. That’s a biggie.
TEDDY DOWNEY: Yeah, that might explain a lot of that kind of weird accounting that we see in the filings related to these variable accounts as well.
PETER GOULD: Right, exactly. Of course, the catch with that is, if you are in a variable product, you do not want to be invested in the guaranteed account, which is the company’s general account. And I heard a story about a policy owner at PHL who before it went into rehabilitation was concerned about his money being safe. So, he moved it from an equity account to the guaranteed account, and it was well over the limit. And basically, that’s sunk money now because he got poor advice.
TEDDY DOWNEY: Oh, that’s heartbreaking. That’s, oh.
PETER GOULD: Two more things.
TEDDY DOWNEY: Yeah, keep going. And then I do want to leave a little bit of time for listener questions. But go ahead, two more things.
PETER GOULD: Only the company who’s named on your contract documents is responsible for paying your benefits. So, if I have a contract with Prudential of Arizona, the parent company Prudential is not going to be responsible if Prudential of Arizona has trouble. Not that I’m saying they do. That’s just an example.
And finally, my 13th one is you need to understand how offshoring regulatory arbitrage and counterparty risk affect your insurance policy or annuity. That’s it.
TEDDY DOWNEY: Well, I know I certainly would love to understand that last one. But everyone makes it impossible to figure out whether or not there are the proper assets to meet the obligations in those Bermuda and Cayman reinsurers. So, trying to understand, try to understand, seems more feasible than actually understanding.
PETER GOULD: I’m low on the learning curve and I’m just trying to claw my way up.
TEDDY DOWNEY: Well, if you have any listener questions, we have a few minutes for them. Please put them in the chat and we’ll try to get to them.
I have one more question here. What do you make of calls for federal we talked about this a little earlier. But what do you make of calls for federal regulation of the industry? There was a recent CRS, Congressional Research Service, report that made some suggestions in favor of potentially a more federal oversight, federal regulation. What do you think about those calls and what do you think about the risk or opportunity in terms of moving from a statebystate to a federal oversight regime?
PETER GOULD: I’d love to see it, but I doubt that I’ll see it during my lifetime. I think I could argue that anything less than a uniform federal regulatory system is just wasting time rearranging deck chairs on the Titanic. It’s just nibble, nibble, nibble, but it seems like we just don’t quite get it.
But what that would require would be repealing McCarran-Ferguson, repeal the Harkin Amendment to DoddFrank and repeal the covered agreements under Title V of Dodd-Frank to really wrest control back to a central regulator who’s really going to be regulating.
But when you think about it, if we had uniform nationwide regulation, permitted practices would disappear, at least within the U.S. Regulatory arbitrage between states would disappear. And we could have a more uniform, cohesive system that would protect consumers better, I think. But don’t hold your breath.
TEDDY DOWNEY: Yeah, I really see this both ways. Because, obviously, one federal system can completely get it wrong and then you end up with the same problems. Like, it’s not like they did a good job regulating banks in 2008, right? During the mortgage crisis.
PETER GOULD: Right.
TEDDY DOWNEY: So, a federal regulator is certainly not necessarily a solution. And in many ways, obviously, it concentrates risk in those federal regulators being competent and not captured as well. But certainly, where we are now with these state regulators where the evidence suggests that they are captive to the industry that the lobbyists I mean, I can’t remember exactly how you put it, but that their basically parasitic relationship, these lobbyists with these state regulators. The state regulators are more attentive to the interests of the companies, the insurers, their parent companies, than to the citizenry. That’s just unacceptable, right? For a democratic society, I mean, where we care about our citizens.
So, whatever the reform is, it’s whether it’s statebystate or federal, it’s more rules to in many respects, I actually think the NAIC and some of these state regulators, their rules actually make sense. It’s just that if you have all these exemptions and permitted practices and this race to the bottom to your point, those rules don’t matter, right? It doesn’t matter how good the rules are. It doesn’t matter how good the NAIC standards are. If you’re allowing all these exemptions to the rules, you’re just going to have a tremendous amount of risks that people don’t know about because it allows for all this opacity and companies to operate outside the rules.
PETER GOULD: Exactly, exactly. So, to that point, one area of interest that I’ve had with NAIC is for the transparency and open meetings so that it’s easier for stakeholders to have access to the deliberations and the discussions. So, in July 2025, I proposed free and easy stakeholder access to live streams and recordings of all of their public meetings. Because currently, you’ve got to pay close to a grand to access their three national meetings each year. And that’s where a lot of the horse trading happens. That’s where a lot of the important stuff happens.
And even today, I was listening to a call on risk-based capital and reinsurance. I had to leave that call to join this podcast. And there’s no way for me to catch up and because I had no access to the recording. And the same thing for other stakeholders like you can’t interrupt your day every day to hit meetings that you’d like to hit. But my gosh, if you could get to the recordings, you could figure out what’s going on pretty quick.
So, that’s been an initiative. I presented it. And for some reason, I can’t get anybody to respond when I ask how they’re doing on it.
TEDDY DOWNEY: Yeah, it’s sad. I mean, it’s like the cameras that the police have to wear. It’s just like nobody wants it. No one wants to press the record button.
Now, last opportunity. Any other things you think you’ve got your state AGs and you’ve got your members of Congress listening here. Anything that you think they should be doing to make sure that this ecosystem is safer for retirees and citizens?
PETER GOULD: I’d ask them to look at the 13 things because that kind of summarizes it. But I’ve kind of come to the conclusion, Teddy, that change is not going to come quickly or great enough to provide me the protection that I need. So, as a consumer, if the regulators can’t regulate it, I would love for them to give me access to the information and the data not only to me, but to astute agents and industry experts who can assess that information and do something with it.
So, give me the information. If you’re not going to regulate it, just step out of the way. Because to some degree, regulators’ hands are tied by the Harkin Amendment, by the covered agreements where they really can’t do much with those. Well, you can’t do much with them. But, by gosh, I can vote with my feet and my premiums and go to an insurer where that’s not a problem. So, I would ask for greater transparency. That would serve everyone well.
TEDDY DOWNEY: Last thing, we’ve been hearing from brokers that they are recommending their retiree clients not to get annuities from PE-owned insurers. Have you seen that from a cultural standpoint in the brokerage business or the insurance agents?
PETER GOULD: With insurance professionals that I communicate with regularly, that is a frequent topic. And I think there is concern about PE ownership. I know of one professional in particular that just totally avoids them. Especially with recent developments, they’ve said, no. We’re just not going to do that. We’re not going to work with a company where the policy owner doesn’t come first. And they may not have the highest payouts or the highest guarantees or whatever, but both the broker and the insured can sleep at night.
TEDDY DOWNEY: I mean, I think that’s fascinating. I think not enough people are understanding that that’s where things are headed. But Peter, this was an incredible conversation. Thank you for all the hard work that you do to try to bring transparency and greater understanding to this market.
PETER GOULD: Teddy, thank you for shining a bright light on this and the other issues that you cover. And as that grumpy old man and retiree and annuity owner, thank you for making your podcasts available to the general public. They should be required listening.
TEDDY DOWNEY: I appreciate that. And really quickly, before we wrap up, The Capitol Forum will continue this conversation at our Life and Annuity Industry at a Crossroads Conference on November 12th at the National Press Club here in Washington, D.C. To learn more and register, visit the events page at thecapitalforum.com. You can also check out our podcasts for Peter’s episode, other episodes, features, conversations just like this. My daughter does the art. It’s a lot of fun. Please check it out. Again, wherever you get podcasts, The Capitol Forum podcasts and the Private Credit Crisis series is on there. Peter, thanks again for doing this and thanks to everyone for listening. This concludes the call. Bye-bye.
