The Industrys Temporary Reprieve On COLI
Thanks to a massive and coordinated grassroots lobbying effort by the life insurance industry, the market for corporate-owned life insurance has been preserved for now, but a lot more work needs to be done.
The industry must demonstrate clearly to the Senate Finance Committee that COLI has been unfairly maligned in newspaper articles that do not reflect the current marketplace.
And beyond that, we hope the industry can encourage the committee to evaluate carefully the impact of the legislation it approves before the fact, not after the fact.
COLI has come under the microscope recently due to a lot of sensational headlines about “janitors insurance.” But these policies were put in place years ago and do not reflect the current legal environment.
COLI remains one of the most important tools available to businesses, particularly small businesses, to fund health and retirement benefits for their employees.
Eliminating that funding mechanism on the basis of a few headlines would be poor public policy.
Of course, the industry could have made its case for COLI if only the committee had taken the time to listen before voting on Sept. 17 to effectively eliminate the product.
But instead, the committee voted on COLI without a single hearing and with very little notice. It is hard to believe the committee members really understood what they were approving.
Now, after the fact, the committee is going to conduct a hearing and a separate vote on COLI, and hopefully, will learn about the importance of this product.
We also hope the committee will refrain from legislating in the future until it gathers all the facts.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 10, 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.