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October 28, 2003 at 07:00 PM
NU Online News Service, Oct. 28, 2003, 5:54 p.m. EST — Washington
Recent comments by Senate Finance Committee Chairman Charles Grassley, R-Iowa, that criticized life insurance industry lobbying on corporate-owned life insurance reflect frustration by the chairman that his committee had to flip-flop on COLI, an industry representative says.
Kim Dorgan, senior vice president of federal affairs at the American Council of Life Insurers, Washington, says it is never a good sign when a committee has to flip-flop on legislation just one week after the legislation was approved.
The controversy surrounds language approved by the committee in September that would severely restrict the use of COLI by taxing the death benefits on policies covering employees who die more than one year after leaving employment.
This treatment would not apply to policies covering key employees.
The language was sponsored by Sen. Jeff Bingaman, D-N.M.
After the language was approved, the insurance industry launched a massive lobbying campaign, and the committee agreed to hold a separate hearing on COLI as well as another vote.
But, during the hearing, which was conducted Oct. 23, Grassley blasted the industry. He said the industry knew that Bingaman had a longstanding interest in COLI.
The committee staff asked the industry to work out a compromise, but the industry refused, Grassley said.
Then, Grassley said, the industry expressed surprise that Bingaman had so many votes.
But Dorgan responded that while Grassley criticized the industry for being late in its lobbying, the fact is that Bingaman filed the amendment on virtually every germane piece of legislation that the committee considered, but never actually offered it for a vote.
