The Senate was scheduled to vote Aug. 4 on legislation long sought by the insurance industry that contains provisions that one insurance analyst said “represent a watershed opportunity for the U.S. life industry” and “could trigger an unparalleled period of sales and earnings growth.”
The comments by Colin Devine of Citigroup are about H.R. 4, a bill designed to shore up private pensions and the agency that backs them, the Pension Benefit Guaranty Corp., but which contains a host of provisions that will add to and enhance the industry’s product offerings.
However, Michael Kerley, senior vice president, federal government relations, at the National Association of Insurance and Financial Advisors, Falls Church, Va., remained cautious at press time.
“Nobody knows for sure except Senate Majority Leader Bill Frist how the procedure will unfold, but there is growing confidence that the pension package will pass the Senate,” he said.
Assuming there are no amendments to the bill, Kerley said, Senate passage means it will become law because the House passed the bill July 28.
“That would imply that there would be no amendments offered to the bill, but we know that a number of senators have concerns over various aspects of the pension issues,” Kerley said. “For example, not all airlines are treated the same. And that is important to Texas senators, for example.”
Assuming passage, two provisions included in the bill are industry priorities. One removes some of the barriers to providing investment advice to members of defined contribution plans such as 401(k)s administered by insurance companies that agents represent, and another adds a long term care rider to annuities.
While officials of NAIFA supported the investment advice provisions–especially one that dealt with providing on-site advice to members of defined contribution plans–some insurance industry officials were voicing concern about the language, implying the industry might seek clarification of the provision.
There was also support for what the bill doesn’t contain. “We were pleased to see the House change the Senate’s investor-owned life insurance (IOLI) proposal from an outright tax on life insurance into a two-year study of the issue,” Kerley said. “We hope to work with the Treasury Department and the congressional tax writers to come up with an effective answer to the IOLI challenge.”
The bill’s passage was tortured, especially over the last several weeks as the House Republican leadership and Sen. Frist sought to hitch it up with passage of estate tax reform legislation.
But early in the week of July 31, the Senate leadership agreed to take up H.R. 4, shorn of tax cut provisions known as “extenders,” after first dealing with a complex package of bills put together into H.R. 5970. That bill includes provisions eliminating the estate tax for most families; raising the minimum wage; extending the tax cut provisions; and adding myriad other provisions designed to gain the votes of wavering Democrats.