Insurance agents would be represented on a commission to study the potential need for a federal role supporting life insurance in the event of a major terrorist attack under legislation approved last week by the House Financial Services Committee.
The legislation, H.R. 3210, which focuses on establishing a federal backstop for losses incurred by property-casualty insurers due to acts of terrorism, also includes a provision to establish a five-member panel to study whether life insurers may also need federal assistance.
The Committee approved the legislation last week by voice vote.
Under H.R. 3210, which is called the Terrorism Risk Protection Act, members of the panel would include representatives of a federal agency designated by the president, the National Association of Insurance Commissioners, a life insurance company association, a life insurance agent association, and the reinsurance industry.
Once created, the panel would have three months to study the issue and present a report.
H.R. 3210 is sponsored by House Financial Services Committee Chairman Mike Oxley, R-Ohio, and Rep. Richard Baker, R-La.
David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., praises the sponsors for including an agent representative on the panel.
In a letter to Rep. Oxley, Winston says that insurance agents are playing an important role in the recovery process following the Sept. 11 terrorist attacks.
NAIFAs perspective, he says, will be very useful to the commission as it studies the potential effects of terrorism on the life insurance industry.
Jack Dolan, a representative of the American Council of Life Insurers, Washington, says that ACLI is very pleased that the Committees proposed study tracks closely the concepts outlined by the Council.
However, Dolan says, ACLI is very surprised that its suggestions for membership on the commission were altered.
ACLI, which first suggested a study, proposed a nine-member commission, including representatives of the federal government, NAIC, the primary insurance industry and the reinsurance industry.
However, ACLI did not include an agent representative in its original proposal.
Similar legislation is expected to be considered by the Senate, but few details about the Senate bill have been released.
It is not clear, at press time, whether the Senate bill will include a life insurance study commission and if so, what the membership will be.
It is also possible that more than one bill could be introduced in the Senate.
The primary bill, which will be based on an agreement between the Senate Banking Committee and the Bush administration, will be introduced by Committee Chairman Paul Sarbanes, D-Md., and Sens. Chris Dodd, D-Conn., Phil Gramm, R-Texas, and Mike Enzi, R-Wy.
However, Senate Commerce Committee Chairman Ernest F. Hollings, D-S.C., may also introduce a bill.
In other news, a proposal by ACLI that would provide a tax incentive for retirees to annuitize their retirement savings is expected to be formally introduced in the House shortly.
The legislation would incorporate ACLIs Lifetime Annuity Payout proposal.
Doug Bates, assistant vice president for taxes with ACLI, says that introduction of the legislation will be the start of a significant debate over how people manage their money and security in retirement.
This debate, he says, will also include issues such as providing a tax incentive for the purchase of long-term care insurance.
Under the LAP proposal, those who choose to annuitize their retirement savings will be taxed at the lower capital gains rate as opposed to the individual rate.
Two members of the House Ways and Means Committee, Reps. Philip S. English, R-Pa., and Karen Thurman, D-Fla., are expected to co-sponsor the bill.
Finally, the House Ways and Means Committee last week approved industry-backed legislation that would expand the range of services that life insurance companies and agents can provide to pension plans.
The legislation, H.R. 2269, called the Security Advice Act, would allow life insurance companies and agents that are already providing certain services to pension plans to also provide investment advice to plan participants.
Currently, the fiduciary provisions of the Employee Retirement Income Security Act bar life insurance companies and agents from providing such investment advice.
Under H.R. 2269, companies and agents could provide investment advice subject to strict requirements that they disclose all fees and any potential conflicts of interest to plan participants.
H.R. 2269 was previously approved by the House Committee on Education and the Workforce and will now go to the House floor.
Ways and Means Committee Chairman Bill Thomas, R-Calif, said the legislation is important for workers who need investment advice.
“Many people dont have the luxury of hiring a financial advisor, but they need and want more access to professional advice,” Thomas says.
He cites a survey which says that 75% of full-time employees say they will take advantage of individualized advice services if their employers offer it.
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 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.