Agents And Companies United In Battle Over COLI Taxation Proposal

He says Congress must act by establishing optional federal chartering of insurance companies.

Fisher says a comprehensive solution to regulatory inefficiencies is needed now. An incremental approach, he says, such as imposing a federal solution only if the states fail to act, is not the answer.

He notes that in previous testimony before the committee, he said that MassMutual lost sales of at least $80 million during the previous year due to an inability to bring products to the market more quickly.

“Unfortunately,” Fisher says, “the overall problem has not gotten any better in the meantime.”

MassMutual still must maintain 42 different versions of a typical universal life product because of differing state requirements, he says.

Moreover, Fisher says, during the past four years, the company has undergone 14 separate, duplicative state market conduct exams, and a 15^th is currently pending.

Gary Hughes, senior vice president and general counsel with the American Council of Life Insurers, Washington, says the implementation of the National Association of Insurance Commissioners own reform agenda demonstrates the problems of relying solely upon state action.

To date, he says, only a few initiatives are under way to implement NAICs blueprint.

Even the most pressing proposal, achieving speed-to-market through an interstate compact, is still in the drafting stage, he says. The proposal has yet to be approved by NAIC, Hughes notes, and even if it is approved, implementation would require action by the legislatures in 50 states and the District of Columbia.

And even then, he says, this would only address one issue for one segment of the insurance industry.

Hughes spoke on behalf of the Financial Services Coordinating Committee, which includes ACLI, the American Bankers Association, the Securities Industry Association and the American Insurance Association, a major property-casualty group.

While other p-c insurers outside of AIA also support optional federal chartering, most of the opposition to the concept comes from the p-c industry.

For example, John R. Lowther, executive vice president of State Automobile Mutual Insurance Company, of Columbus, Ohio, says that the demand for reform on the p-c side is coming from those who want to gain an edge in the marketplace.

“The fact is we are all trying to eat each others lunch and some are asking the Congress to set the table,” Lawther says.

He notes, however, that there are meaningful differences between p-c insurers and life insurers, and his company is not in the life insurance business.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 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.