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October 16, 2003 at 08:00 PM
By
Washington
With little notice, the Senate Finance Committee postponed its scheduled hearing on corporate-owned life insurance, an action that disturbed industry representatives.
The delay was apparently requested by Sen. Jeff Bingaman, D-N.M., who sponsored the controversial language approved by the committee in September that would tax the death benefits on COLI policies covering former employees who die more than one year after leaving their jobs.
Bob Plybon, president of the Association for Advanced Life Underwriting, Falls Church, Va., says AALU is disappointed Bingaman requested the delay.
People were already in town ready to testify on behalf of AALU and the National Association of Insurance and Financial Advisors, Plybon says, and it is disappointing that the industry did not have a chance to make its case for COLI.
Ken Kies, counsel to AALU, adds that Bingaman has been focusing on this issue for over a year, and yet when the time comes for a hearing, he asks for a delay.
The only conclusion that can be reached, Kies says, is that Bingaman was unsuccessful in finding witnesses to support his position.
However, a press representative of the Finance Committee told National Underwriter the hearing was postponed because committee members wanted to have a witness testify who is anti-COLI and the particular witness who was scheduled to testify was not available on the original day of the hearing.
She said the members felt it was important for this witness to testify in order to have a fairer and more balanced presentation on COLI.
Jack Dolan, a spokesman for the Washington-based American Council of Life Insurers, says it is not uncommon for a Congressional hearing to be postponed.
“We were ready to testify last week and we will be ready to testify this week,” Dolan says.
The hearing has been rescheduled for Oct. 23, at 2 p.m.
In a draft of their testimony, AALU and NAIFA challenge news reports regarding alleged abuses regarding COLI as “sensationalist” and “grossly distorted.”
For example, they say, stories about so-called “janitors insurance” reflect the pre-1996 legal environment. The tax benefits associated with these past programs were eliminated by Congress in 1996, the testimony says.
Moreover, the testimony says, COLI generally covers only managerial-level employees and employers almost universally obtain the consent of insured employees.
