While dangers posed by Congress and federal regulators to life insurance professionals were a chief focus of the NAIFA Career Conference and Convention that concluded in Las Vegas on Tuesday, issues of concern at the state level also were aired.
Developments with respect to investor-owned life insurance, commission disclosure, state estate tax, among other areas, as well as NAIFA’s efforts to roll back regulatory excesses, were covered during a Legislative Forum on Monday presented by NAIFA’s Government Relations Team.
Gary Sanders, NAIFA’s vice president of securities and state government relations, said that investor-owned life insurance, remains a threat to the life insurance industry in the 20 states that have not yet passed anti-IOLI regulation.
He noted that IOLI proponents–life settlement companies, brokers, banks and other institutions that finance the transactions–have “big dollars and resources” to advance their lobbying efforts. In opposition, NAIFA’s state associations are playing a key role in getting anti-IOLI legislation enacted.
Also a continuing focus of NAIFA at the state level, said Sanders, are estate taxations, given that many states are “hurting for money;’ stopping the misleading use of senior designations and certifications; as well as the development of state health insurance exchanges, market reforms and long-term care insurance rates.
“The states see themselves as laboratories for all kinds of innovations,” said Sanders. “So it’s in our interest to keep a close eye on what they’re up to.”
Turning to commission disclosures, Roland Panneton, NAIFA’s senior counsel of state government relations, reprised the association’s efforts in 2011 to water down New York State’s proposed commission disclosure regulation. As originally drafted, the rule would have required agents to disclosure their commission on product sales at the client’s request; and to alert the client that this information may be requested.
Panneton noted that outgoing NAIFA President Robert Miller worked at length with industry partners, including the Association for Advanced Life Underwriting, to make the requirement less onerous than the draft regulation. While the revision was a victory for the industry, Panneton noted that New York’s courts have since validated the New York State Superintendent’s authority to promulgate such a requirement.
But the effect of the disclosure requirement has not been as disruptive to the sales process, as many industry observers had feared.
“The regulation has now been in effect for over a year and a half,” said Panneton. “And our latest research indicates that it has not been disruptive to the sales process.”
He added that, given New York’s status as as “bell weather state” in respect to state insurance regulation, market watchers also feared that other states would follow suit with similar disclosure requirements. But this hasn’t happened.
Turning to prospects for state annuity disclosure requirements, Panneton said the National Association of Insurance Commissioners has nearly completed amendments to its annuity disclosure model law. The amendments now provide guidelines for annuity illustrations.
“During the amendment process, NAIFA wanted to ensure–and this was retained in the final revisions to the model law–that the decision to present an annuity illustration to a client rest with the agent and the insurer,” he said. “So there is no requirement that every annuity sale have an annuity illustration attached to it.”