Some insurance companies are considering lowering their payout rates in fixed annuities, a move that could hurt sales for bank brokerages that have made the product a staple of their business.

The potential move is in response to insurance rating agencies that are forcing companies to raise the levels of reserves they maintain. To meet the requirements, insurance companies may decide to lower guaranteed rates of return on their annuity products.

The problem for banks is that customers often don't understand that the guaranteed rate of return may not last as long as they think. Thus, insurance companies often "renew" the rates after a year, meaning they lower them so they don't have to pay out as much to the customer.

"The bank insurance person needs to understand how the renewal rates are set," said William Busler, president of the financial markets division at Aegon USA Inc. in Baltimore. "Sometimes they aren't trained very well in that process."

Banks risk complaints from customers who have signed, say, a seven-year annuity contract expecting a rate of return throughout the duration. Often insurance companies really only guarantee the rate for one year, yet they penalize customers for getting out early.

Regulators said they were unaware of any customer lawsuits against banks, insurance agents, or underwriters over changes in the payout on annuities. But "the insurance agent could be terminated, and regulators could slap a fine on the bank" if proper disclosure procedures aren't followed, said Valerie Jordan, a bank insurance consultant in Belchertown, Mass.

Some bankers don't foresee a real problem.

For one thing, insurance companies know that banks often drop underwriters that hawk long-term contracts but guarantee rates only for the first year, said Edward Diamond, president of the brokerage at Dime Savings Bank of New York.

"We've avoided those companies that continue that practice," he said.

Mr. Diamond added that insurance companies have ways of getting around the problem without lowering their rates. For instance, they may increase their penalties for early withdrawal, betting that enough customers will bail out early to pay for the other customers' guaranteed rate.

Insurance companies may also shorten the duration of their contract, so they are guaranteeing rates for a shorter period of time. "Market forces are going to mitigate the effect," Mr. Diamond said.

And Aegon's Mr. Busler sees a silver lining, even if his sales drop because rates are lowered. "Maybe people will stop looking at fixed annuities for the rate and more for the reasons they're supposed to - the long-term tax-deferral features."

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