More comprehensive data could be useful to Congress in assessing the potential effects of legislative proposals relating to corporate-owned life insurance, says the United States General Accounting Office.
Currently, GAO says in a report released last week, limited data are available on the prevalence and use of COLI. Data would be most useful if reported separately for business continuation and broad-based policies because legislative proposals generally have treated these policies differently, GAO says.
Data on the amount of tax-free income that businesses received from death benefits could help explain the potential effect of changes to the tax treatment of policies on tax revenues, GAO adds.
However, 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.
GAO notes that federal bank regulators have reviewed the holdings of financial institutions that have significant amounts of COLI and 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, GAO testified that insurance companies either did not maintain data on COLI use or if they did, did not maintain it in a form that was useful for an analysis.