While stock insurance companies were on the verge of a huge coup at press time as they awaited word on whether the Senate would accept legislation reworking certain tax breaks for business (see above), the industry still has many other items on its wish list on which Congress has not taken action.
That list will now include extension of the Terrorism Risk Insurance Act legislation, as passed by the House Financial Services Committee Sept. 29. The legislation adds group life insurance to the categories provided a federal backstop in case of a major terrorist attack. At press time, it seemed unlikely Congress would act on the legislation before it adjourned. It is also unclear whether it would be taken up in a lame-duck session scheduled for mid-November.
Additionally, the bill as passed by the panel contains holes. The life insurance industry wants a separate pool for group life coverage but was unable to get that in the bill reported out by the committee. Efforts will be made by the industry to change that on the floor of Congress during the lame-duck session, but such an effort is seen as unlikely to pass. The bill, in general, faces problems because Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, wants to deal with it next year, after the Treasury Department finishes a study on the viability of the current legislation.
Several other parts of the industrys agenda virtually were ignored in the current Congress.
For instance, the industry sought to interest Congress in passing legislation that make annuities more attractive by reducing the tax bite. Legislation sanctioning so-called LAPs, or Lifetime Annuity Payouts, has been promoted by the industry in the last several Congresses without effect. This provision would apply capital gains rates, rather than ordinary income tax rates, to lifetime annuity payments.
Despite strong support, the industry also was unable to persuade Congress to offer greater incentives for people to buy long term care insurance. The legislation sought by the industry would provide Americans with an above-the-line federal income tax deduction on LTCI premiums that would be offered under employer-sponsored cafeteria plans and flexible spending accounts. The industry also is promoting legislation that would offer a tax credit of up to $3,000, phased in over 4 years, to those with LTC needs or their caregivers. Even an effort to revive the bill created by the death of President Reagan in June failed to enthuse Congress.
The life agents lobby was unable to win support for a provision that would codify the tax treatment of COLI and at the same time deal with recent criticism of the product by mandating that companies disclose the face amount of COLI outstanding, disclose to employees that the company they work for has taken out insurance on their life, and provide other consumer and tax protections. The provision was included in tax legislation passed by the Senate Finance Committee in February. Despite the fact it wouldnt have a fiscal impact, House-Senate conferees declined to move on it.
Reproduced from National Underwriter Edition, October 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.