Close Close

Regulation and Compliance > State Regulation

Panelists: IOLI Regulation Should Remain With States

Your article was successfully shared with the contacts you provided.

When the discussion of the AALU annual meeting’s Washington Report Session turned to the topic of investor-initiated life insurance, moderator David Stertzer found his 4 panelists speaking with one voice. The federal government, they said, should stay out of the debate.

“We’re better off letting the states address the [IOLI] issue,” said Kenneth Kies. “Our experience has been that when Congress steps into a debate, they tend to do it poorly. The AALU has appropriately taken a self-regulatory approach to the issue and demonstrated the industry can act responsibly.”

Marc Cadin agreed. “We prefer that [IOLI regulation] remain at the state level. We don’t want to raise the issue to any degree on Capitol Hill.”

Cadin added the AALU is not against life settlements or premium financing per se. But AALU member companies view life insurance policies that are purchased with the intent to sell to a life settlement company or third-party investor as “threatening” to the long-term tax treatment of the product. He noted, too, that AALU’s leadership is “spending a lot of time” in consultation with the NAIC, the 50 states and other industry organizations–including the ACLI, NAILBA and NAIFA–to promote changes in the model settlement laws that the industry can accept.

Bill Archer echoed Cadin’s view that abusive practices in the IOLI market could spur Congress to overreact by curtailing the preferred tax treatment accorded to life insurance.

But Kies discounted this possibility, at least for the near term. “Right now, the danger of [federal regulation] is minor,” Kies said. The work of the AALU and others is keeping this issue from becoming a problem. For the foreseeable future, I think that’s where it will stay.”

– Warren S. Hersch


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.