(Reuters) - Senator Elizabeth Warren said 13 major U.S. life insurers had admitted to using incentives such as expensive vacations and gifts, which could encourage agents "to put their own interests ahead of their clients."
The senator had launched an investigation into 15 major annuity providers in April amid concerns about the "kickbacks" they offered to brokers who peddle products to retirees.
Warren voiced her concern about the loopholes in law that allows some advisers to steer customers into complex financial products for higher rewards.
"Research suggests that this loophole costs Americans an estimated $17 billion every year," she said in a report released by her office on Tuesday.
Annuity providers, including American International Group Inc (N:AIG), offer anything from luxury cruises, trips to Tahiti, Costa Rica or Rome, creating conflicts of interest, Massachusetts Democrat Warren said.
"Companies shouldn't be allowed to offer expensive vacations, prizes and other kickbacks to agents in exchange for selling costly, second-rate investment products to unsuspecting customers," Senator Warren said in the report.
The report was based on responses from 15 companies to letters asking for information on whether they offered non-cashincentives.
Annuities are popular among retirees because they can offer a steady stream of income. There are a variety of types, including some that provide a guaranteed payout and others whose payout is pegged to the performance of underlying securities.
Earlier, the U.S. Labor Department proposed new rules to curb conflicts of interest that could lead brokers to steer retirees into less-than-ideal investments.
Companies mentioned in her report include, Prudential (L:PRU) Annuities (N:PRU), Jackson National Life, Lincoln Financial Group (N:LNC), Allianz Life Insurance Co (DE:ALVG), TIAA-CREF, New York Life, Transamerica, AXA USA (PA:AXAF), Nationwide, Pacific Life, Forethought Annuity, RiverSource Life Insurance and Security Benefit Life.
Prudential's spokeswoman said the company had received the report and was reviewing it, while TIAA-CREF said "as a matter of policy (it) does not engage in product-based incentives."
Jackson National spokeswoman said in an emailed statement that it does not offer any of the non-cash incentives described in Senator Warren's letter or in the report issued by her office.
AIG, New York Life, Lincoln Financial, Allianz Life Insurance, Transamerica, AXA USA, Nationwide, Pacific Life, Forethought Annuity, RiverSource Life Insurance and Security Benefit Life were not immediately available to comment.