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Bob Graham is executive editor at Insurance & Financial Advisor and IFAwebnews.com.

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A new battleground between insurance and regulators will be formally drawn May 20 in Washington, D.C., when the National Association of Insurance Commissioners (NAIC) holds a public hearing to explore the growing practice of stranger owned/originated annuities.

Based on the comments of the head of the committee looking into these transactions, there’s no doubt where the NAIC falls on the issue. “I envision hearing from the victims, the consumers who may have been duped, quite frankly,” Thomas R. Sullivan, Connecticut insurance commissioner and head of the NAIC’s Life Insurance and Annuities Committee, which will play host to the hearing.

Sullivan made the comment to me a few weeks ago, when the NAIC first announced its plan to investigate the practice. Then and now, I see those as fighting words, coming from a group, the NAIC, that has been battling over an unrelated, but similar insurance practice, stranger-owned life insurance (STOLI) transactions, for several years. The battle over STOLI has been intense, with many of those selling life settlements complaining about the NAIC’s targeting of the entire industry for the harmful actions of a few bad apples. The same is probably true in the stranger-owned annuity arena.

Right or wrong, Sullivan’s comment gives a sense of where the NAIC is headed with stranger-owned annuities, meaning a war is brewing between the NAIC and that industry.