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Life Health > Life Insurance

Resolution Opposing Limited Term Licenses Advances

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A resolution opposing a limited term insurance license advanced toward full endorsement by the National Association of Insurance Commissioners at its summer meeting here.

During the Market Regulation and Consumer Affairs “D” Committee two insurance commissioners, North Dakota’s Jim Poolman and Oregon’s Joel Ario, and one consumer advocate, Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, spoke in favor of the resolution. Poolman chairs the Producer Licensing Working Group that voted the measure up to the “D” Committee during the spring NAIC meeting in March.

Primerica Financial Services, Duluth, Ga., then challenged the resolution saying it would cut off a way to reach the underserved market that today’s insurance environment is not servicing.

Louisiana Rep. Shirley Bowler, R-78th District, supported Primerica’s position on the same ground. The National Conference of Insurance Legislatures, Troy, N.Y., also is considering the issue.

Ario noted that while opponents of the measure have a valid point about access to insurance, the need for uniform producer licensing laws among states was the reason he was supporting the resolution. He said some states have life licenses rather than a combination of life & health licenses, and companies could pursue business in these states and thereby put more agents in the market.

Poolman also said the issue of uniformity, particularly in light of the discussion on the SMART Act in Washington, was a reason to support the resolution.

Birnbaum said the discussion raises a good opportunity for regulators to take an in-depth look at meeting the needs of the underserved market. He said that arguments made in opposition to the model are based on faulty economic analysis because there is no basis to conclude that increasing the number of agents would increase the availability of insurance to the underserved market.

Both during the “D” Committee at a public hearing earlier in the meeting, the National Association of Insurance and Financial Advisors, Falls Church, Va., supported the resolution.

At the hearing, NAIFA representative Bill Anderson said that putting agents in the market who don’t understand life insurance is not a benefit to a consumer. It will also complicate the producer licensing system, he added.

During the hearing, Bowler had argued that there is a need and that state governments provide an “incubator” for trying new ideas to meet needs.

Bowler cautioned that if Congress does not believe the insurance industry is serving the public broadly, that federal tax exemptions for life insurance could be put at risk in the future. If Congress is trying to raise revenue in the future, it may look at the insurance tax benefit and decide that it can get rid of it, Bowler said.

Peter Schneider, executive vice president with Primerica, Duluth, Ga., personalized the issue of those most in need benefiting from life insurance by referencing a real life example of a man who took a construction job in Iraq to help make ends meet and was killed. His family received a $400,000 check, according to Schneider. He argued that a limited term license would put agents in the market to meet families that would also need a death benefit in the event the breadwinner was killed.

Regulators cite need for uniform producer licensing laws among the states


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