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Blue Mans Blues

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Being a blue man from a blue state in the bluest part of the country, the election turned out to be a stunner. I keep looking at maps of the country and am amazed at the sea of red covering the South and most of the Midwest as well as the Rocky Mountain states.

In actuality, of course, there was very little color differentiation this year from the contest four years ago, but the fact that President Bush won by some 3.6 million votes this time made the red seem that much deeper somehow.

And the margins in some of those states! The president carried Nebraska (no surprise) with 67% of the vote to John Kerrys 32%. In Utah (again no surprise) 71% voted for the president, while only 27% went for Kerry.

When you look at the map with its colossal red heartland between blue bookends (and a blue pocket in the north Midwest), its hard not to think that we really do have two different countries existing within one border.

With such stark differences, I am putting a lot of hope (probably naively, considering his track record) into Mr. Bushs statement that he is “humbled by the trust and confidence of my fellow citizens. With that trust comes a duty to serve all Americans, and I will do my best to fulfill that duty every day as your president.”

And what might the industry expect in a second Bush term? Im certain that there was widespread happiness with the voters verdict among the executive and agent cohorts. But this jubilation should be tempered with the recognition that many of Mr. Bushs proposals could cause severe harm to the butter on the industrys bread, if not the bread itself.

I dont think this is an exaggeration. And neither do industry leaders.

The coldest wind is the proposal for Lifetime Savings Accounts, those tax-free vehicles that the administration has pushed off and on. Industry leaders fear, and rightly so, that such accounts would eviscerate the market for life insurance and other industry savings products such as annuities.

The tax-free inside cash buildup might come under attack in any case, but these LSAs would be a direct attack. After all, if tax-free alternatives proliferate, any tax-free vehicle already in existence becomes discounted, just one of a number of options.

Frank Keating, president of the American Council of Life Insurers, says LSAs “are death to long-term savings and are terrible to Americas only long-term savings industry, and we will fight LSAs block by block and street by street.”

Similarly, the administration has, despite industry opposition, put support behind Association Health Plans that allow small businesses to pool resources in order to increase their purchasing power.

According to Joel Wood, vice president of governmental affairs for the Council of Insurance Agents and Brokers, many people in the benefits business believe that Association Health Plans “would exacerbate existing problems of companies exiting the health insurance marketplace, increasing cherry-picking.”

On the other hand, Mr. Bushs plans to privatize at least a portion of Social Security accounts and allow workers to manage investments in these portions may have some companies salivating. But the grim reality for life insurers is that this would be a pretty long line of financial companies looking for lucrative new business, and the industrys track record in competing with mutual fund companies, for instance, has not exactly been stellar.

And last but not least, what of the estate tax? With both the House and the Senate more strongly in Republican hands than ever and with Mr. Bushs appetite for tax cuts seemingly unabated, we can expect a push to get rid of the estate tax for good. This will no doubt gladden the knee-jerk opponents of the hated death tax, but think how much life insurance is sold because of it.

Yes, its going to be an interesting four years, and not only for those of us in blue states, but for many in a predominately red industry.

Steve Piontek


Reproduced from National Underwriter Edition, November 4, 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.