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.
Congress should enact the investment advice provisions of H.R. 3762 before it adjourns.
Beyond these issues, the prospects for legislation are particularly dim in the weeks left in the 107th Congress.
Nonetheless, this Congress can and should help lay the groundwork for the resolution of issues that will have to be addressed sooner or later.
Heading the list is long-term care insurance. While the House approved H.R. 4946, which provides a limited deduction for LTC premiums, more is needed.
Without a major expansion of private LTC insurance, the nations social welfare system could be strained to the breaking point in the not-too-distant future when the baby boomers begin to retire.
H.R. 4946 might be a good start, but this Congress should acknowledge it is only a start.
In addition, Congress at some time will have to address the abuses of the nations civil justice system.
The Senate Judiciary Committee did begin the process recently with a hearing on S. 1712, legislation that would allow major national class action lawsuits to be heard in federal courts, where they belong.
A similar bill, H.R. 2341, is pending in the House. It is too much to expect legislation as controversial as class action reform to pass in an election year. But Congress would do the nation a service by continuing to hold hearings exposing the catalog of abuses.
The 107th Congress is undoubtedly anxious to adjourn as soon as possible, but its work is far from done.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 19, 2002. Copyright 2002 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.