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NAILBA 29: BGAs Optimistic about Consumers, Nervous about Washington

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Sure, some of the exhibitors at NAILBA 29 brought putting greens — but Allianz Life Insurance Company of North America set up a full-size electronic driving range.

And, sure, NAILBA 29 organizers scheduled some of those general-interest, general-session speakers who tend to be an excuse to go hang out by the pool–but MetLife Inc. sponsored an appearance by Tom Peters, the author of the best-selling, economy-shaping In Search of Excellence, and Prudential Financial Inc. hooked George W. Bush, the former president of the United States.

NAILBA 29 was the 29th annual meeting of the National Association of Independent Life Brokerage Agencies (NAILBA), Fairfax, Va., a group for the wholesalers who help life insurers distribute their products to independent agents and brokers.

Each of NAILBA’s member agencies does business with hundreds or thousands of retail agencies. Those brokerage general agencies (BGAs) are, in effect, the levers the insurers hope to use to move the world – or, at least, the slothful, cash-strapped American consumer.

An insurance company rep rolled her eyes when asked why she had come to NAILBA 29.

“I’m here,” the rep said, “because my customers are here.”

Two years ago, Douglas Mishkin, the 2008 NAILBA chairman, got up at NAILBA’s 27th annual meeting to urge BGAs to stand strong against the financial crisis.

“Producers must reassure clients that the promises held in their insurance contracts are safe,” Mishkin said in 2008.

A year ago, NAILBA leaders were talking about how the organization had revamped itself, partly in response to the economic crisis.

This year, the mood was much more positive.

The number of BGAs seems to be smaller than it was before the crisis hit, but “the distributors that are still here are here to stay,” the insurer rep said in an interview. “I hope.”

Others at the meeting were more firmly bullish.

William Zimmerman, president of LifePro Financial Services Inc., San Diego, a distributor, said the world is much different than it was a year ago.

“Business is back,” Zimmerman said.

Chip Milner, a Lawrenceville, Ga., BGA, said business was great last year for an agency like his, which focuses on fixed and indexed products, and has been even better this year.

“When the economy’s poor, consumers prioritize,” Milner said. “Our products are serious products for serious needs.”

Buck Stinson, a vice president at Genworth Financial Inc., Richmond, Va., said that stability is building consumer confidence, and that growing consumer confidence should bring consumers back to the table.

“I’m not cautiously optimistic,” Stinson said. “I’m optimistic.”

But NAILBA members are still watching Washington closely.

Last year, Leon Huffman, the co-chair of the NAILBA government affairs committee, was warning that the debates about health finance reform and financial services reform had created a toxic environment that presented ominous threats to BGAs’ livelihoods.

In the past year, NAILBA has worked with other industry groups to keep the new Consumer Financial Protection Bureau from regulating the insurance business, and it and its allies succeeded at getting a provision into the new Dodd-Frank Wall Street Reform and Consumer Protection Act that will keep the U.S. Securities and Exchange Commission from regulating indexed annuities or general account insurance products as securities.

Republicans have swept into control over the House of Representatives, and many NAILBA members are expecting them to be friendlier to business interests.

But one-fifth of all members of Congress and one-third of the Republicans in Congress are new, Huffman said at a government affairs session this year.

Alex DelPizzo, an insurance lobbyist at Winning Strategies L.L.C., Washington, said the shift in Congress creates opportunities–and challenges.

“You have a bunch of people there who have no idea what you do,” DelPizzo said.

DelPizzo fears congressional gridlock could lead estate tax rates and thresholds to snap back to the painful levels in effect in 2001, before the Economic Growth and Tax Relief Reconciliation Act came along.

“I would hope cooler heads prevail, but it hasn’t happened yet,” DelPizzo said. “I wouldn’t count on it.”

Huffman and DelPizzo said Tea Party members’ worries about the federal budget deficit could threaten the current tax treatment of the buildup of cash value inside life insurance policies.

The National Commission on Fiscal Responsibility and Reform, a group created by President Obama to look for ways to cut the federal budget deficit, recently posted a draft report showing that it has been considering the idea of lowering the marginal tax rate and increasing revenue by eliminating all federal “tax expenditures,” including the current treatment of inside buildup.

“We have been put on notice that our products will be on the table when there are discussions about raising revenue,” Huffman said. If defenders of the home mortgage interest deduction go head to head with defenders of protecting the current inside buildup tax treatment, “who’s going to win that battle?” Huffman asked.

Terry Headley, president of the National Association of Insurance and Financial Advisors, Falls Church, Va., said NAILBA member BGAs are in a position to help strengthen the industry, by encouraging retail agents and brokers to participate more actively in groups such as NAIFA.

With so much optimism going around, it is a small wonder that NAILBA itself proclaimed its 29th annual meeting to be a resounding success. Whether that success will translate to improved business for its many attendees remains to be seen, but it will certainly be a topic of interest when the industry gathers once more at NAILBA 30, to be held next November 17-19 in Phoenix, Arizona.


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