Industry Intends To Have Seat At Table As Items On Bush Agenda Surface
On notice that President Bush plans to use the “political capital” he earned in the last election to sustain tax cuts he secured in his first term and revamp Social Security, the life insurance industry isnt waiting until the new Congress starts work to ensure its products maintain their growth path.
At the same time, the industry has its own agenda, including regulatory modernization and the emerging issue of what official Washington, D.C., will do in reaction to disclosure of alleged wrongdoing in brokerage transactions.
Regarding the Presidents agenda, in a series of print and radio ads designed to reach Washington policymakers, the American Council of Life Insurers earlier this month began highlighting the importance “of long-term savings, financial and retirement security to Americans,” said Jack Dolan, a spokesman for ACLI.
Additionally, he said, they will show “the need for Congress and the administration to examine these issues and to highlight how life insurers play a vital role in the economy, in the retirement security of millions of Americans, and how we have expertise needed in the upcoming debate over retirement security.”
In a recent interview, Frank Keating, president and CEO of the ACLI, said the life industrys top priority is legislation either providing an optional federal charter or something along the lines of the SMART (State Modernization and Regulatory Transparency) Act drafted by the staff of the House Financial Services Committee this fall, but never formally introduced.
“State regulatory reform and modernization are the No. 1 issues to the life insurance companies the ACLI represents,” Keating said. “A large percentage of our board supports modernization.”
But frustration appears to be settling in over the flagging pace of modernization.
At a Consumer Federation of America conference Dec. 2, Gary Hughes, general counsel of the ACLI, said an OFC bill might have a better chance if it were targeted solely at life insurance, signaling a shift from the current policy that has the life and property/casualty industries moving in lockstep on the issue. “Our business is more suitable to a national regulator” than to state-by-state regulation, he said.
But Dolan, the ACLI spokesman, sought to dampen such speculation. “Some have raised the idea of a life-only bill, but it remains a hypothetical concept at this point. No legislation to this effect has been introduced, and we have not sought such a measure.”
Jim Edwards, a spokesman for the National Association of Insurance and Financial Advisors, said, “We stand behind the SMART Act because it addresses the concerns we have with the regulatory system [including licensing and speed to market issues] while relying on the best elements of the current state structure, for example, the regulators expertise and coordinated action through the NAIC.”
Regarding federal action stemming from the broker scandal, which may affect congressional action on modernization, Dolan said, “Its pretty clear that Congress is going to be continuing to examine state insurance regulation in the next Congress and we dont know where they might go. Our goal is to ensure that if there are any regulatory changes prompted by the various probes, they dont set us backward. We need uniformity in the laws and rules governing life insurance.”
In his comments, Keating said he is aware that the legislative agenda being laid out by Republicans is for more tax cuts, including a permanent repeal of the estate tax and for creating a private role for Social Security.
The industry also realizes the Republicans will be under pressure from their conservative allies to establish Lifetime Savings Accounts.