NU Online News Service, Oct. 24, 2003, 1:35 p.m. EDT — Washington
Senate Finance Committee Chairman Charles Grassley, R-Iowa, criticized the life insurance industry Thursday for its opposition to language approved by his committee that would largely shut down the market for corporate-owned life insurance.
In an opening statement at a hearing on COLI, Grassley also criticized insurers for what he described as an apparent failure to maintain information about COLI sales.
The issue involves an amendment approved by the committee in September that would tax the death benefits on COLI policies covering workers who die more than one year after leaving employment. The amendment would exclude policies that cover key employees.
The amendment was sponsored by Sen. Jeff Bingaman, D-N.M.
During yesterday’s hearing, Grassley said the industry knew that Bingaman had a longstanding interest in this issue.
The Finance Committee staff asked the life insurance industry to try to work out a compromise, but the industry refused, Grassley said.
Then, he said, the industry expressed surprise that Bingaman had so many votes.
Grassley said he personally believes that Congress effectively dealt with all the abuses surrounding COLI in 1996 legislation.
Bingaman disagrees with that, but that is his right, Grassley said.
However, Grassley said, he is troubled by the apparent lack of information available about COLI. He noted that the General Accounting Office tried to conduct a survey of insurance companies about the uses of COLI.
The GAO was unable to complete the survey because some companies in the life insurance industry either did not have any data or did not have data in a usable form, Grassley said.
Grassley said some insurance companies say COLI accounts for 25% of their business.
How is it, he asked, that insurance companies do not have information about 25% of their business?