Today’s financial crisis is leading to news reports that question the capabilities of the insurance industry, warns Douglas Mishkin.
Mishkin, the 2008 chairman of the National Association of Independent Life Brokerage Agencies, Fairfax, Va., and a brokerage general agent with Algren Park Avenue Brokerage, New York, N.Y., talked about the industry’s response to the crisis here at NAILBA’s 27th annual meeting.
The current climate could easily cause consumers to lose confidence in the financial markets as well as in their advisors, at a time when advisors need to help the baby boom generation buy life insurance, long term care insurance and annuity products, Mishkin said in his last address as NAILBA chairman.
“In times like this, it is more important than ever for us to make our producers understand that our industry and carriers still have strong underlying fundamentals,” Mishkin said. “Producers must reassure clients that the promises held in their insurance contracts are safe.
“And it is our job as BGAs to make sure that the proper message is sent to the independent sales force, who are not always in direct contact with carriers, and who can get mixed messages from the media as to the health of our industry.”
In recent years, NAILBA has stepped up advocacy efforts, Mishkin reported.
“The importance of that will become clear next year,” he said, “as the industry will possibly need to protect itself against bad regulations and bad selling practices.”
On the tax reform front, Mishkin predicted that 2009 and 2010 will be very active years.
The Obama administration will be looking for ways to finance the bailout packages, and “our industry is one of the only ones left with a tax-advantaged product,” Mishkin said.
This makes the insurance industry “a prime target,” Mishkin said.
For instance, he said, it’s possible that the inside buildup may come under attack.
The Obama administration also may try to limit the amount of tax free death benefit that an individual can hold on that individual’s life, said Mishkin. “Imagine if that happens,” he said.
NAILBA has joined with several other industry organizations to form a coalition that aims to organize a unified response, Mishkin said.
The other members are the American Council of Life Insurers, Washington; the National Association of Insurance and Financial Advisors, Falls Church, Va.; the Association for Advanced Life Underwriting, Falls Church; and GAMA International, Falls Church.
NAILBA also has launched an online legislative action center for members, and it is building up its political action committee.
The association continues to support optional federal charter legislation, Mishkin said, referring to legislation that would give the industry a choice between traditional state regulation and federal regulation.
OFC legislation seemed to have been tabled to 2010, Mishkin noted, but, with today’s focus on regulation of the financial services industry, “this may become a reality in 2009,” he suggested.
The association’s view is that “state regulation has become inefficient, at least when it comes to life insurance,” Mishkin said. For example, he said it makes no sense that people cannot benefit from access to the same products that are offered in neighboring states. OFC will provide individuals with access to all products across the country, he said.