By

Washington

The life insurance industry is preparing for a busy legislative agenda during the rest of 2003.

Kim Dorgan, senior vice president of federal affairs for the American Council of Life Insurers, says pension reform, taxation, privacy and insurance regulatory reform all will be on the congressional calendar before the first session of the 108th Congress ends.

Dorgan says she is excited about the Portman-Cardin pension reform bill, H.R. 1776, which has a provision establishing an incentive for retirees to take some of their pension savings in the form of a lifetime annuity.

Moreover, she says, she is encouraged that House Ways and Means Committee Chairman Bill Thomas, R-Calif., personally supports the annuity concept.

H.R. 1776 was approved by the committee in June.

Dorgan says the Senate, however, still has not really looked at the broad pension reform issues addressed by H.R. 1776. Rather, she says, the Senate is still thinking about pension issues in the context of cleaning up Enron.

It will be a longer go in the Senate on pension reform, Dorgan says, but ACLI is taking steps to encourage Senate activity.

On the tax front, she says, several insurance-related issues are contained in an international tax bill, H.R. 2896.

First, Dorgan says, the billl would extend the current treatment of investment income earned by foreign subsidiaries of U.S. financial services firms under Subpart F of the tax code until 2007.

In addition, she says, it will extend the current suspension of taxes paid by mutual companies under Section 809 of the code.

ACLI, Dorgan stresses, will be working to provide similar tax treatment to policyholder surplus accounts held by stock companies under Section 815 of the code.

Finally, she says, H.R. 2896 addresses the nonqualified deferred compensation issue in a way that provides the first formal legislative recognition of rabbi trusts.

Bob Plybon, president of the Association for Advanced Life Underwriting, Falls Church, Va., says AALU has worked hard with technical input, lobbying and grass-roots activity, to assure any changes Congress considers on deferred comp are reasonable.

The issue, Plybon says, appears to be moving in a positive direction, but it is unclear whether legislation will be enacted this year.

Turning to corporate-owned life insurance, Plybon says the industry has worked hard to promote a better understanding of the benefits provided by COLI policies.

A 63-37 vote in the Senate against an amendment that drastically would have undermined COLI shows the industry has made significant progress, he says.

No COLI legislation appears on the horizon, Plybon says, but AALU will increase its edcuation efforts.

As for estate tax repeal, Plybon says he does not expect legislation to be approved in 2003, although there likely will be a vote in the Senate before the legislative year ends.

AALU, he says, will continue working with groups that seek responsible and permanent estate tax reform.

On privacy, Dorgan notes that legislation pending in the House to reauthorize the Fair Credit Reporting Act, H.R. 2622, limits the sharing of personal medical information but provides an important exception for life insurance.

The legislation allows the sharing of medical information among insurance company affiliates if the information is necessary in connection with a life insurance or annuity policy. The legislation, Dorgan adds, recognizes the legitimate need of life insurers for medical information.

Finally, she says, she expects the Senate Commerce Committee to hold hearings the first week of October on insurance regulation.

Dorgan says she is excited to have the opportunity to pursue optional federal chartering in the Senate.

In the House, she says, the Financial Services Committee is planning to hold a roundtable discussion around the end of September that will focus on progress at the state level on regulatory reform.

Bill Anderson, senior vice president of government affairs with the National Association of Insurance and Financial Advisors, Falls Church, Va., adds that another important issue expected to come soon, possibly even this week, is class-action reform legislation. The bill, S. 274, would establish federal court jurisdiction over most major, interstate, class-action lawsuits.

Anderson says he is delighted the Senate appears ready to act on class-actions reform. NAIFA, he says, has been working hard on this issue and has sent “Action Alerts” to its members.

Another major issue facing NAIFA, Anderson says, is the issue of life insurance sales on military bases.

Currently, a directive is in place that regulates the time, place and manner in which life insurance agents can offer products to military personnel on military bases.

However, NAIFA says the Defense Department is preparing changes to the directive that could greatly restrict, or possibly ban, such contacts.

In recent testimony to the Defense Department, NAIFA says the current directive, along with applicable state regulation, strike a proper balance between the right of military personnel to have meaningful access to insurance products and the goal of satisfactory protection from predatory activities.

“The importance of ensuring that military personnel have access to insurance products cannot be overstated,” NAIFA says. “In order to ensure security for both the individual and his or her family, it is never too early for military personnel to begin financial planning.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 8, 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.