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Congress Needs More COLI Data, GAO Says

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NU Online News Service, May 14, 2004, 6:07 p.m. EDT, Washington – More comprehensive data “could be useful” to Congress in assessing the potential effects of legislative proposals relating to corporate-owned life insurance, the United States General Accounting Office says.[@@]

Currently, only limited figures are available on the prevalence and use of COLI, the GAO says.

Data would be most useful if reported separately for business continuation and broad-based policies because legislative proposals have generally treated these policies differently, the GAO says.

Data on the amount of tax-free income that businesses receive from death benefits could help explain the potential effect of changes in the tax treatment of policies on tax revenues, the GAO adds.

However, the GAO says, should Congress decide this data is useful, it should still make a determination of whether the costs of acquiring the information outweigh the benefits of doing so.

The GAO notes that federal bank regulators have reviewed the holdings of financial institutions that have significant amounts of COLI and have concluded that no major supervisory concerns exist.

The issue of COLI use emerged when the Senate Finance Committee considered rewriting the COLI tax rules earlier this year. During a committee hearing, the GAO testified that insurance companies either did not maintain data on COLI use or, if they did, did not maintain it in an easily analyzed form.