Congress Returns To A Full Plate Of Industry Issues

A Senate hearing Sept. 5 on whether there should be a designation for selling annuities to seniors ensures there will be a fast start by Congress this fall in dealing with a full plate of issues affecting the life insurance industry.

This agenda includes a likely early hearing on legislation proposed by Rep. George Miller, D-Cal., chairman of the House Education and Labor Committee, requiring increased disclosure of fees charged 401(k) plan participants, followed by a vote on the House floor expected Sept. 11 on legislation extending the Terrorism Risk Insurance Act.

For first time since the program was enacted in November 2002, the TRIA legislation will explicitly call for coverage of group life insurance.

Further down the line, Congress is expected to hold hearings on various insurance regulatory reform issues. It will also consider a full range of health insurance issues, such as inclusion of Long Term Care insurance in cafeteria plans; mental health parity legislation; adequate funding for the federal state High Risk Pools program; and legislation outlawing discrimination based on genetics.

Additionally, the insurance industry remains on high alert in anticipation that Congress will at least review life insurance tax benefit issues as it considers how to pay for an extension of legislation reducing the burden of the alternative minimum tax on the middle class.

The Senate is also expected to deal with H.R. 2831, the Lilly Ledbetter Fair Pay Act, which would reverse a 5-4 Supreme Court decision and establish a paycheck rule for filing wage discrimination cases under the Civil Rights Act.

The legislation, which narrowly passed the House in July, would consider each paycheck to be a separate discriminatory act if the paycheck is less than it otherwise would have been due to the employee’s sex, race, color, religion or national origin.

The Sept. 5 hearing by the Senate Aging Committee will deal with the suitability of annuities for seniors, and whether there should be a separate designation for those eligible to market these products to seniors.

Commenting on the hearing, Jack Dolan, a spokesman for the American Council of Life Insurance, said that as it relates to the issue of credentialing, “the confusion caused by the myriad of delegations for insurance professionals certainly needs to be addressed.”

But, he added, “It needs to be made clear that deferred annuities can certainly play an important and necessary part in the financial plans of certain retirees.”

The industry also expects an early legislative hearing on Miller’s fee disclosure bill, with a markup and House floor action on such legislation before Thanksgiving.

Reiterating a general financial services industry position, Dolan noted there is a great deal of congressional interest in increased disclosure of fees for 401(k) plans to participants. “We are all for transparency and disclosure, but what is most important is for plan participants is to receive meaningful information they can understand. Overwhelming participants with information can truly be detrimental.

“Voluminous disclosures can turn people off. Congress needs to provide incentives for plan participants to fully understand the ramifications of their investments,” Dolan said.

The TRIA bill will mark a major forward step for life insurers, who have been battling since 2002 to be included in the program. But, despite the fact the House is likely to pass the bill overwhelmingly before Sept. 12, “Getting the Senate to include group life coverage will be hard,” Dolan said. He said it is also uncertain how the Senate will treat the language in the House limiting use of travel plans in underwriting insurance policies.

Dolan said it is likely the Senate will try to bring its TRIA bill, which is expected to be more limited in scope than the House bill, to the floor before Thanksgiving so that work can be completed on the extension bill before the program expires Dec. 31.

The House Financial Services Committee is also expected to hold several hearings on insurance regulatory issues this fall. But it is unclear whether one of the hearings will involve an airing of legislation introduced in July by Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., calling for creating an optional federal charter.

Michael Kerley, senior vice president, federal government relations for the National Association of Insurance and Financial Advisers, expects to spend a great deal of time defending the industry’s position this fall as Congress deals with another interim fix to the alternative minimum tax.