The next Congress could give the life insurance industry a federal charter system–but participants in a discussion hosted by a group that backs the optional federal charter concept says the next Congress also could consider measures that would increase insurers’ regulatory burdens.
Life industry representatives talked about the insurance legislation climate during a recent post-election Webcast organized by the Association for Advanced Life Underwriting, Falls Church, Va.
Advocates of “optional federal charter” proposals want Congress to create a federal insurance regulator and let insurers, and producers, choose between state and federal regulation.
“We think an OFC has moved from a possibility, maybe even a probability, to an inevitability [in the next Congress],” Mike Hunter, chief operating officer of the American Council of Life Insurers, Washington, said during the AALU Webcast.
The AALU supports the concept of OFC legislation.
Due to the financial crisis, industry participants “must be on our toes to make sure that Congress doesn’t overdo it,” said Ken Kies, a member of the AALU counsel team who has served as chief of staff at the Congressional Joint Committee on Taxation.
“Congress has a habit when a problem comes up of sometimes going a little too far, and we have a huge problem here, so we don’t want to end up with something like a Sarbanes-Oxley Act on steroids,” Kies said.
Today, there “is a real risk that could happen,” Kies warned. “We must be very involved in helping to shape a bill so we don’t end up with a regulatory environment that is so burdensome that it stifles normal business activity.”
Congress could consider legislation affecting deferred compensation programs, Kies said.
“We need to make sure that the public and media understand that there are legitimate executive compensation practices that AALU members are very helpful to companies in implementing,” Kies said. “The public and media shouldn’t be painting with one brush [the idea] that every executive compensation package is an offensive thing. We must communicate the important role executive compensation pays in retaining a company’s quality people.”
Kies cited non-qualified deferred compensation plans as an example of arrangements that should be protected.
“Our role in helping fund deferred non-qualified compensation plans helps provide protection not only to top people but mid-level people as well,” Kies said. “We have a challenge here because ‘executive compensation’ has become a dirty two-word phase that evokes a lot of misinformation because of what Wall Street was paid over last couple of years.”