ACLI Now Supports Bush Plan To Eliminate Double Taxation Of Dividends
The life insurance industry is expressing broad support for President Bushs economic stimulus and growth package now that Treasury Secretary Jack Snow has said he believes any problems involving life insurance products can be resolved. (See NU, March 10.)
Frank Keating, president of the American Council of Life Insurers, Washington, along with some 47 chief executive officers of life insurance companies, last week sent a joint letter to Bush expressing support for the goal of eliminating the double taxation of dividends, treatment which they say should also apply to annuities.
Keating told National Underwriter that executives of ACLI member companies joined him in a series of meetings with administration officials to discuss the importance of extending the tax-free treatment of dividends to annuities.
He says that because the life insurance industry is regulated at the state level, issues of great importance to the industry are often not understood in-depth by policymakers in Washington.
When Bush proposed his economic package aimed at encouraging savings, Keating says, life insurers were stunned to find that annuities would be disadvantaged.
ACLI, he says, began a series of meetings with technical staff at the Treasury Department and also met with Glenn Hubbard, who then was chairman of the Council of Economic Advisors.
The consistent message, according to Keating, was that an annuity is the one product that helps Americans save for retirement and guarantees a lifetime income. It should not be disadvantaged, he says.
Subsequently, Keating says, Arthur F. Ryan, chairman of Prudential Insurance Company, Newark, N.J., joined him in a meeting with Snow.
Snow then told a House Ways and Means Committee meeting an accommodation would be reached with the life insurance industry.
Keating says the letter supporting the presidents goals signed by the industry executives represents an appropriate statement now that the administration has embraced the view that life insurance products must be encouraged, not discouraged.
As of this writing, it was unclear when Congress would act on the economic stimulus package. The war with Iraq, Keating notes, is likely to dominate the news for now.
Another major issue that could be affected by the war is medical malpractice liability reform.
In the wake of the recent 229-196 vote in the House of Representatives approving H.R. 5, legislation that would place a $250,000 cap on noneconomic damages in medical liability cases, reform advocates are urging the Senate to act quickly to finalize the legislation.
“There is now a consensus that the legal system failed to protect consumers,” says Karen Ignagni, president of the American Association of Health Plans, Washington. “It is time for Congress to set partisanship aside and pass meaningful liability reform.”
Legislation similar to H.R. 5 has been introduced in the Senate by Sen. John Ensign, R-Nev., whose state has experienced a medical malpractice crisis.
Ensigns bill, S. 607, while not identical to H.R. 5, contains most of the same features.
In addition to the $250,000 cap on noneconomic damages, the bill would cap punitive damages at $250,000 or two times compensatory damages, whichever is greater, establish proportional liability, and establish a set timeframe during which plaintiffs must file lawsuits.
However, because of the parliamentary rules in the Senate, which require 60 votes to prevent a filibuster, industry lobbyists believe some adjustment of the caps will be necessary to advance the bill.
Melissa Shelk, vice president of federal affairs for the American Insurance Association, says Senate leaders have been meeting to try to develop a bipartisan bill.
While the details of the meeting are unknown, she says, it is likely any bipartisan package will include a catastrophic exception to the $250,000 cap.
Shelk says she believes the Senate leadership wants to move a bill soon, although it could be delayed by the war.
Still, Shelk says, she is hopeful the Senate will approve a bill before Congress adjourns for its scheduled two-week recess on April 14.
Finally, ACLI told the United States Trade Representative that negotiations with Russia over that countrys accession to the World Trade Organization are taking a troubling turn.
In a joint letter with AIA, ACLI says Russian negotiators are insisting on an arbitrary cap of 15% on total foreign investment in that countrys insurance market.
“Were the U.S. to agree to such an arbitrary limitation on foreign investment, it would create a precedent that we feel the U.S. should not tolerate,” the letter says.
In addition, the letter says, the Russian negotiators are insisting on a 49% limitation on foreign equity interest in a life insurance company.
“We have fought successfully against such limitations elsewhere, and this cap is not acceptable here,” the letter says.
While some progress has been made on insurance issues, there is still a long way to go before an acceptable package on WTO accession is reached, according to the letter.
Reproduced from National Underwriter Edition, March 24, 2003. Copyright 2003 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.