The NewRiver Summary Prospectus Index is reporting "staggering" growth in use of summary prospectuses within the variable annuity market.
As of April, summary prospectuses were available for more than 29,000 sub-fund options in VAs, up from 2,509 in March, says NewRiver Inc., Andover, Mass.
A summary prospectus is a 3- or 4-page document showing key information about each VA subaccount option. It is supposed to be written in plain English and is supposed to be easier for VA owners to read and comprehend than full-length sub-fund prospectuses, which may be more than 100 pages long.
Other findings from NewRiver's April index:
- More than 3,000 variable product contracts have at least one sub-account with a summary prospectus document.
- The number of stand-alone summary prospectuses for retirement funds rose to 45%, from 37% in March.
- More 4,300 mutual fund summary prospectus documents are available for stand-alone delivery.
"The recent Index numbers clearly show that the variable annuity market is primed to reap significant cost savings by reducing print and postage," says NewRiver Chairman Russ Planitzer.
Assuming an average savings of $10 per contract holder per year, the savings for insurers and their partners could reach over $220 million if they keep adopting the summary prospectus, he says.
The New River index tracks summary prospectus filings through the U.S. Securities and Exchange Commission's EDGAR database and breaks out separate results for variable annuity, retirement services and mutual fund filings.