NU Online News Service, Feb. 3, 10:03 a.m. – Party changes, term limits and budget shortfalls have changed the climate for insurance bills in state legislatures this year, according to Bruce Ferguson, vice president, state relations, at the American Council of Life Insurers, Washington.
The ACLI wants states to work on the Interstate Compact, a project that could cut red tape by creating a single point of filing for life insurance products.
The ACLI also wants states to lower the minimum crediting rate on fixed annuities, to reflect the fact that interest rates are far lower today than they were when the crediting rate was set.
Because state insurance committees and insurance committee leaders have changed so much, the ACLI will have to take the time to educate lawmakers about the issues, Ferguson says.
Education will be particularly important, he says, if a benchmark index that is being developed gets wide support. Eighteen states have already enacted temporary legislation that lets insurers use a 1.5% minimum crediting rate, but the ACLI would like to persuade all states to adopt an index-based approach.
But looming state budget deficits could get in the way, because many state legislatures will have to turn their attention to balancing budgets before they can address pending bills, Ferguson says.
Revenue-shy states may also increase the fees life insurers pay and cut insurance department budgets in connection with broader budget-reduction efforts, Ferguson says.