The sponsor of a corporate-owned life insurance disclosure bill is demanding that the House leadership schedule a public hearing for the legislation.
At a press conference, Rep. Gene Green, D-Texas, said that his legislation, H.R. 4551, has 51 co-sponsors, including both Republicans and Democrats, and that it addresses an important employee concern.
Nonetheless, he said, the legislation is stalled.
“Unfortunately, we have not been able to have a hearing in the Energy and Commerce Committee,” Green said.
“Companies buying secret life insurance policies on the lives of their rank-and-file employees is wrong, and I think it is important that people know about these policies,” he said.
The legislation, called the Life Insurance Employee Notification Act (LIEN), requires companies to disclose to covered employees that a COLI policy has been purchased in their names.
The bill is targeted at policies covering large numbers of rank-and-file employees, policies sometimes called “janitors insurance.”
“I support the free enterprise system and I want companies to make money, but they shouldnt be reaping profits from the deaths of their employees or former employees,” Green said.
He said that some companies earn 16% of their profits from these COLI policies.
Green said that COLI has a legitimate business purpose when it covers high-level employees whose deaths will affect the company.
“However,” Green said, “this is not the case with rank-and-file employees and they have the right to know the company has placed a price on their heads.”
He noted that his own state of Texas regulates COLI through an insurable interest statute. Green said he hopes other states will follow suit.
The American Council of Life Insurers, Washington, says it supports the approach taken by the National Association of Insurance Commissioners, Kansas, City, Mo.
NAIC recently published revised guidelines for COLI policies that would require increased notification to workers and consent to their participation, ACLI notes.
Under the NAIC guidelines, employers would be required to notify employees of their proposed participation in COLI policies and obtain the written consent of the employee.
An employer would be barred from retaliating against an employee who refused consent.
“The NAIC has taken a wise approach in recognizing the continuing importance of these plans to both employees and employers alike,” says Laurie Lewis, chief counsel for ACLI.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 7, 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.