GOP Disarray Is Stalling The Industrys Agenda

In the interim, the insurance industry agenda sits.

However, there are several positives for the industry.

One is that despite its disarray, Congress will act on extension of the Terrorism Risk Insurance Act before it departs.

While it did not win mandated coverage for group life in the Terrorism Risk Insurance Act when it was first passed in late 2002, it now appears likely that whatever Congress does with TRIA, a provision will be included mandating coverage of group life insurance.

Equally important, it appears that the issue of repeal of the estate tax, something the industry opposes, is one that has come and gone. Senate Majority Leader William Frist, R-Tenn., continually says that the Senate will deal with the issue this fall, but the consensus is that he won’t because repeal lacks the 60 votes needed for passage. As one industry lobbyist put it last week, “The best time for the Republicans to get this bill through was last January and February. Now, support for it clearly has declined as the issues Congress has in front of it have changed.”

As Kimberly Olson Dorgan, senior vice president, federal relations, at the American Council of Life Insurers, added, “We anticipate that there will be a vote on repeal before the end of the year and that effort will be defeated because they don’t have the 60 votes for full repeal.”

Dorgan predicts that “reform and lowering of applicable tax rates on estates are likely to be taken up next year.” What is needed, she says, is “something that the federal government can sustain over time. And the industry is looking for certainty.”

The insurance industry does have one major concern going into next year–the recommendations of a tax reform panel that will issue its report Nov. 1.

Michael I. Kerley, senior vice president for federal relations at the National Association of Insurance and Financial Advisors, said, “If President Bush makes a strong effort to have the Congress deal with his ‘savings’ proposals next year, we have our work cut out for us because one of those proposals would deliver a death blow to life insurance and annuities, not to mention employer-provided health insurance and flexible savings accounts and health savings accounts.

“We will have to await the full report, but, from the descriptions we have seen so far, the tax reform panel’s proposals would have a terribly negative impact on the life and health insurance industries,” Kerley said.

On the Hill, next year is a long time away. For now, it’s a wait-and-see game.

The best time for the Republicans to get this bill through was last January and February,” said one lobbyist regarding repeal of the estate tax. “Now, support for it clearly has declined as the issues Congress has in front of it have changed.”