As a general proposition, following the VALIC, United Benefit and Prudential cases, those insurers and agents selling variable insurance contracts have become subject to the broad gamut of regulatory, disclosure and antifraud requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. Although in many situations the SEC has sought to accommodate the federal securities laws to the nature and structure of the life insurance industry, the unique attributes of the contracts and the role of state insurance regulation, the SEC has not backed away from enforcing its fundamental concerns and approaches embodied in these laws simply to defer to state regulation. SEC regulation of variable contracts is very real and very detailed. However, it has not been done in a way to seek and/or achieve exclusive control through preemption of state regulatory activity over variable contracts.

At the same time, the states continued to view variable contracts as insurance products subject to the full range of insurance regulation. State legislatures and regulators (both individually and collectively through the NAIC) have evolved standards, regulations and procedures to deal with the unique nature of these products as well as the practical necessity of accommodating insurance regulation to the substantial presence and applicability of federal securities regulation. The conflict and accommodation between the SEC, the life insurance industry and the state insurance regulators have led to a dual system of regulation. The design of variable insurance contracts, the sales and distribution process, and the administrative mechanisms must satisfy the requirements of both state insurance law and federal securities laws. Dual federal SEC and state insurance regulation is an existing fact of life and promises to continue to be so for insurers and their agents operating in the variable contract area.