Industry Regroups After Failing To Get Annuities In The Tax Cut Bill
The fallout from the failure of Congress to include variable annuities in the dividend tax cut provision of the economic stimulus bill continued last week as life insurance representatives pressured Congress and the administration to solve the problem.
Most notable, perhaps, is a letter to Treasury Secretary John W. Snow from Maurice R. Greenberg, chairman of New York-based AIG.
The letter was first published by BNA.
In the letter, Greenberg notes that the tax bill “did not cure the problem for variable annuities, hence the life insurance industry will be at a disadvantage against the mutual fund industry.
“There are tens of thousands of annuitants that will feel more than mildly disappointed given the assurances that we and others made that this problem would be cured,” the letter adds.
“AIG and I personally have supported the presidents tax bill, as I told you I would,” the letter says. “What suggestions do you now have, John, to help put right a very major wrong?
“When we last spoke, I was assured that this problem would be solved,” the letter says. “I relied on that fact. I am sorry to add to your problems, but this is an important issue.”
Meanwhile, Frank Keating, president of the American Council of Life Insurers, Washington, says Congress needs to focus on retirement security in the wake of the tax cut bill.
“The annuity can significantly boost the retirement security of millions of Americans,” Keating says in a statement.
“Unfortunately, Congress failed to include annuities in the tax cut legislation,” he adds. “ACLI strongly urges Congress to provide incentives that encourage more people to secure lifetime income through an annuity.”
In other news, the Health Insurance Association of America is criticizing legislation recently approved by the Senate Health, Education and Pensions Committee that would prohibit health insurers from using genetic information against insureds.
The legislation, S. 1053, was developed by Sen. Olympia Snowe, R-Maine.
Under the legislation, insurance companies would be barred from collecting genetic information prior to a persons enrollment in a plan.
In addition, insurers would be barred from using genetic information, including family background and results of a genetic test, to deny coverage or set premiums.
Snowe says the legislation is “absolutely critical” in ensuring that individuals can pursue necessary treatments in complete confidence.
“Insurers will not be able to deny coverage, cancel coverage or adjust premium rates, and employers will not be able to use genetic information as a means of determining employment decisions,” Snowe says.
But HIAA President Donald Young says legislation like S. 1053 is a “solution in search of a problem.”
Indeed, Young says, independent research confirms that health insurers do not currently use genetic information in determining coverage or in setting premiums, nor do they plan to do so in the future.
However, Young adds, while the legislation is well-intended and the sponsors have tried to carefully define key terms, it still may end up blocking the use of information on current health status that insurers have relied upon for many years.
“Imposing restrictions beyond those already in place could hurt the very people they are intended to help by limiting the ability of insurers to appropriately and fairly set premiums,” he says.
Young says protections already exist under current law. The Health Insurance Portability and Accountability Act, he says, prohibits employer-sponsored group health plans, as well as individual insurers, from using genetic information to refuse or cancel coverage, charge higher premiums or impose pre-existing condition limits.
Given the existing legal protections and the rapidly evolving nature of genetic technology, Young says, it is premature for Congress to consider any additional legislation at this time.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 2, 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.