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September 20, 2009 at 08:00 PM
The life insurance community is facing an unprecedented “perfect storm” of legislative and regulatory challenges. Yet, even as it continues to do battle with Congress and industry watchdogs, the National Association of Insurance and Financial Advisors itself is facing an operating deficit and a continuing loss of members–twin threats that could place the organization’s future at risk.
These were the sobering messages delivered by NAIFA executives at a general session of the organization’s 2009 NAIFA Convention and Career Conference, held here last week.
“As we work through the coming year, and deal with proposals on tax, regulation and health reform, it has never been as important as it is today for all of us at the local, state and national levels to band together as a team,” said NAIFA President Cliff Wilson. “Our clients and the industry need a proactive and strong NAIFA. I believe the progress of this past year positions us to lead with credibility as we move forward.” 
The blueprint for this progress, he said, is the NAIFA 21 Strategic Plan. Adopted in April 2007, the initiative contains 5 strategic objectives: (1) reconstituting and growing NAIFA political programs, including its APIC and IFAPAC political action committees; (2) introducing legislation and regulation; (3) working collaboratively with sister organizations; (4) strengthening state legislative and regulatory activities; and (5) improving the speed and frequency of communication.
On all 5 fronts, said NAIFA’s executives, the organization has had successes, most notably in respect to advocacy. Wilson observed that NAIFA’s federal relations staff attended or co-hosted more than 100 D.C. fundraisers for members on key committees of jurisdiction between January and July of 2009. NAIFA was also one of two organizations invited to meet with high-level White House and Treasury officials to articulate the industry positions on regulatory reform.
Additionally, Wilson said, NAIFA crafted bills to streamline producer licensing and allow agents to act as “navigators” in health reform legislation. The organization also expanded securities lobbying efforts and engaged directly with SEC and FINRA officials.
Of the many insurance projects on which NAIFA lobbied collaboratively with other organizations, the largest coalition was assembled in an effort to circumscribe the authority of a proposed Consumer Financial Protection Agency. A dozen organizations worked together on the initiative.
The stakes in the various legislative battles, said NAIFA CEO John Healy, are high, particularly with respect to continuing Congressional threats to remove or erode the tax-favored treatment of life insurance. Benefits long enjoyed by policyholders and their beneficiaries–the tax-free distribution of death benefit proceeds and the tax-deferred build-up of cash values inside permanent contracts–will remain at risk so long as additional tax revenue is needed to close the yawning budget deficit and national debt.
Legislative threats, Healy warned, are particularly acute, coming on the heels of the most severe recession since the Great Depression, and because of an unusual coinciding of major legislative initiatives that Congress is now addressing.
“Last year’s market meltdown, followed by the course-altering elections of 2008, has spawned a perfect legislative and regulatory storm that has already affected our profession and industry and will continue to do so in the future,” said Healy. “The franchise and foundation of our business are being challenged and will remain under relentless attack as Congress and the Administration look for ways to pay for all they want to do.
“Congress is at work on three critical fronts: health care reform, regulatory reform and the taxation of life insurance and annuities,” he added. “But only NAIFA has the ability to stand guard on behalf of you and your clients. We will fight for our industry.”
