After a busy and sometimes contentious legislative year in 2003, the life insurance industry is hoping to see resolution of some issues in 2004 while remaining on the alert for potentially serious challenges.
Issues such as corporate-owned life insurance and class-action legal reform may be resolved early in the second session of the 108th Congress, industry representatives say.
Both would represent major victories for the industry. However, Bush administration savings proposals also are expected to resurface, posing a challenge to annuities.
Jack Dolan, a spokesman for the American Council of Life Insurers, Washington, notes that 2004 is an election year, with control of both the White House and Congress at stake. This always poses uncertainties for legislation, Dolan says, but on the issue of COLI, the industry is cautiously optimistic of an early markup in the Senate Finance Committee.
Bob Plybon, president of the Association for Advanced Life Underwriting, Falls Church, Va., praises Sen. Kent Conrad, D-N.D., for developing a solution that assures proper use of COLI. “We are optimistic the Senate Finance Committee will mark up and approve a fair COLI proposal as part of the pension bill in early 2004,” he says.
The other issue that could be resolved early in 2004 is class-action legal reform.
Bill Anderson, senior vice president of law and government relations for the National Association of Insurance and Financial Advisors, Falls Church, Va., says formal legislative language on a compromise between 3 Democratic senators and the sponsors of class-action reform has not yet been released.
However, he notes, the support of the 3 Democrats should be enough to overcome a filibuster. Earlier this year, the class-action bill, S. 1751, was blocked when a cloture motion lost by only one vote.
Dolan says ACLI is expecting a vote on S. 1751 early in 2004. He notes that ACLI, along with other business groups, has expended a tremendous effort on class-action reform for many years.
Turning to the Bush savings proposals, Treasury Secretary John Snow says that early in the year, the administration will again promote Lifetime Savings Accounts and Retirement Savings Accounts.
LSAs allow individuals to place up to $7,500 annually in an account, earn tax-free interest and withdraw the money at any time for any purpose.
RSAs are similar except that the money cannot be withdrawn without penalty until age 59.
Anderson says life agents are “dead against” LSAs because of the impact on retirement savings.
There is a reason for the current tax treatment of annuities, Anderson says, and that is to encourage people to save for retirement. “We are the only providers of products that are there for retirement.”