The National Association of Insurance and Financial Advisors had the largest insurance industry Political Action Committee (PAC) for the 2002 election cycle as of the most recent reporting date of July 31, 2001.
NAIFA has nearly $491,000 in receipts, just ahead of AFLAC with almost $461,000, Citigroup with $438,000 and the Independent Insurance Agents of America with $335,000.
The American Council of Life Insurers reported $134,695 in receipts as of July 31, but the figures for life insurance companies must be viewed in context.
Many life insurance companies have substantial individual PACs, and generally lobby on behalf of the same issues.
For example, Met Life reported $306,339 in receipts; CIGNA, $279,261; Mass Mutual, $196,725; American General, $181,161; and New York Life, $153,834.
When these figures are aggregated with other life insurance PAC numbers, life insurers represent a very powerful force in the financing of Congressional elections.
Turning to an issue that could become a focus of emotional Congressional debate, the American Academy of Actuaries last week addressed the perceptions and realities of genetic testing.
In the Senate, two genetic testing bills–S. 318 and S. 382–are currently pending. They seek to limit the ability of insurance companies to use genetic information when making underwriting decisions.
In its presentation, the Academy says that while life insurers may indeed require applicants to reveal results of genetic tests already performed in order to avoid adverse selection, the impact of such a requirement will not be uniform.
However, the Academy says, while the perception is that genetic testing will cause more people to be denied life insurance, the reality is that some people could gain greater access to coverage.
Others, or those with specific genetic conditions, the Academy says, could see reduced access to coverage or higher premiums.
The Academy cites the example of Polycystic Kidney Disease, which an individual has a 50% chance of inheriting from a parent and which usually takes effect between the ages of 20 and 30.
Under current underwriting practices, the Academy says, those under age 30 who may be at risk pay premiums six to seven times the standard rate.
Those over 30, the Academy says, may pay standard rates if they demonstrate no symptoms and exhibit no biochemical markers.
But looking at the potential effect of genetic testing, the Academy says that if the individual does not have the gene for Polycystic Kidney Disease, he or she will likely pay standard or even preferred rates.
Another perception, the Academy says, is that genetic testing will alter the way life insurance is sold.
But the reality, according to the Academy, is that genetic testing probably will not greatly change the current life insurance market.
An analogous situation, the Academy says, is preferred underwriting, which was introduced in the 1990s. The old standard class was subdivided based on evidence of reduced risk, such as low cholesterol.
Preferred underwriting, the Academy says, resulted in reduced premiums for the preferred class, but no increase for the standard class.
The reason, the Academy says, is information. Better information improves the ability of insurance companies to underwrite and thus lowers the overall cost of life insurance to the public.
Thus, the Academy says, rates went down for preferred risks but did not increase for standard risks.
The Academy says it is important to examine the unintended consequences of restricting genetic testing.
Those who could have inherited an unfavorable trait but did not may not get standard or preferred rates, the Academy says.
Moreover, the Academy says, the reduction in rates brought about by preferred underwriting could be rolled back, resulting in an overall increase in the cost of life insurance.
Finally, a prominent legal reform group has filed a petition with the Federal Trade Commission asking it to regulate contingency fee arrangements by attorneys.
The Washington Legal Foundation asks the FTC to declare it an unfair trade practice for a lawyer to enter into a contingency fee arrangement without first disclosing in writing certain information to the client.
This includes: (a) that the client has a three-business-day cooling-off period to reconsider and rescind an arrangement, (b) that the size of the fee is subject to negotiation and (c) that there are potential adverse consequences of litigation, such as payment of the attorneys out-of-pocket expenses.
In addition, WLF says attorneys should disclose the approximate chance of recovery and estimate the likely award.
WLF is represented by nationally known tort expert Victor E. Schwartz of the law firm of Shook, Hardy & Bacon.
WLF says regulation of contingency fees is a matter of consumer protection. Plaintiffs often lack the experience and information necessary to evaluate their claims and assess the work and skill needed to pursue it, WLF says.
However, the Association of Trial Lawyers of America says that contingency fees are already regulated.
Courts always possess the power to review attorneys fees, ATLA says. Moreover, ATLA says, every jurisdiction in the United States has a fee dispute procedure.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.