Industry Maintaining Watch Over COLI Legislations Passage

By

Washington

With Congress back for what could be an abbreviated but contentious session, life insurance lobbyists say corporate-owned life insurance is the biggest remaining issue still confronting the industry.

Sen. Jeff Bingaman, D-N.M., is expected to introduce legislation that would tax the death benefits of a COLI policy covering anyone who dies more than a year after leaving his or her employer.

Industry representatives say the proposal is likely to be attached to some other bill that is moving through Congress, but it is unclear what it will be.

One lobbyist says there are a lot of “must do” bills pending before Congress. Indeed, he says, Congress still has not passed a single appropriations bill.

Several of these are possible vehicles for the COLI language, he says.

The likelihood, he says, is that Congress will remain in session until the second week of October, recess for the election, and then reconvene in late November for a “lame duck” session.

The industry, this lobbyist says, will have to remain alert for any legislative vehicle containing the expected COLI provision that might be pushed through in the last hectic hours before adjournment.

Two other pending issues are terrorism insurance, which includes a study of the impact of terrorism on the life insurance business, and legal reform.

Property-casualty industry lobbyists believe the terrorism insurance legislation (H.R. 3210 in the House and S. 2600 in the Senate) has a good chance for enactment.

On the legal reform front, S. 1712, which would allow defendants to have large class action lawsuits heard in federal courts, is pending before the Senate. However, the bill is given very little chance of passage due to the opposition of Senate Judiciary Committee Chairman Patrick Leahy, D-Vt.

Turning to health insurance, the nations largest manufacturers association says it will pursue an initiative to have the Department of Health and Human Services establish a clearinghouse for information about the quality of health care being delivered by various providers.

The proposal comes against the backdrop of a new round of double-digit health care inflation that could cause manufacturers to eliminate health care benefits, says Jerry Jasinowski, president of the National Association of Manufacturers, Washington.

“Health care spending in America is out-of-control,” Jasinowski says. “No issue is more critical to manufacturers than the rising cost of health care.”

Jasinowski made his comments at a press briefing.

One of the primary factors behind the cost increase is a lack of productivity in the health care sector, which he says, lags behind other sectors of the economy on this key performance measure.

Jasinowski says studies indicate that between 25% and 33% of all health care spending is for services that are unnecessary, out-of-date and detrimental to patients.

“There is redundancy and waste in the system,” he says.

He also cites a recent Institute of Medicine report that says some 100,000 people in the U.S. die each year due to medical errors.

Manufacturers, he says, must absorb at least some of the resulting costs if they are to continue to provide health coverage to their employees.

However, Jasinowski says, the situation is becoming critical.

Health care spending, he says, now accounts for 14% of the nations Gross Domestic Product, which is twice as much as the amount spent on computers and information processing.

Spending could reach 20% of GDP by the end of the decade, he says.

It is vital, according to Jasinowski, that consumers and small businesses have the tools necessary to make decisions about health care quality.

Only the federal government, he says, has the resources and reach necessary to disseminate quality information.

“What the manufacturing sector and all of business needs desperately is a comprehensive mechanism whereby the quality of health care options can be measured and evaluated, and NAM believes that a public and private sector partnership could well provide it,” Jasinowski says.

Finally, the American Council of Life Insurers, Washington, reports that U.S. trade negotiators are working with Japanese negotiators to try to resolve industry concerns over Japans government-owned life insurance, named Kampo.

Bill Freshwater, associate director and counsel for international relations with ACLI, says there has been some movement. However, he says, it is hard to predict how far it will go during the next year.

One of ACLIs biggest concerns, expressed during a recent press briefing, is the fact that Kampo does not pay into Japans policyholder safety net fund that is mandatory for other insurers.

Freshwater says there has been no discussion yet on the substantive issues raised by ACLI. Rather, he says, the discussion has been more general, with Japanese trade representatives saying that while Kampo does have advantages not enjoyed by other insurers, it also faces offsetting restrictions on its business activities that do not apply to other insurers.

Freshwater praises U.S. trade negotiators, however, as strong advocates who understand the concerns raised by ACLI. He says they will not let up and will continue to push for reform.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 9, 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.