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August 18, 2002 at 08:00 PM
Important Issues Await Congress On Its Return From Recess
Perhaps it is wishful thinking, yet we remain hopeful Congress will address some of the long-term issues affecting the nation generally and the insurance industry specifically when it returns from its August recess.
Frankly, the prospects for enacting major legislation are not good. With control of the House and the Senate up for grabs in the November election, members will be anxious to take care of only the most pressing business and then go home as quickly as possible to campaign.
Terrorism insurance legislation that includes a study of the potential economic impact on the life insurance industry of another terrorist attack should be on the “must do” list.
In addition, investment advice legislation providing incentives for employers, particularly small employers, to offer this benefit to employees and which is fair to all financial service providers, should be a high priority.
While two investment advice proposals are pending, the one that meets the test is H.R. 3762. This legislation allows those that already provide services to defined contribution plans to also offer investment advice to participants, subject to strict disclosure rules.
H.R. 3762 does not impose significant new costs or obligations on plans and allows all qualified individuals, including state-regulated life insurance agents, to participate.
By contrast, the approach in S. 1971 imposes a host of new and expensive recordkeeping requirements on employers to avoid potential liability.
Moreover, under this bill, state-regulated insurance agents would effectively be barred from participating in the program, since they are not included in the definition of “qualified investment advisor.”
If the goal is to make investment advice more readily available to plan participants, then a proposal like S. 1971 that imposes more costs on plan sponsors and bars an entire segment of the financial services industry from participating is the wrong way to go.
