Coming off of one of the most contentious general elections in recent history, the life and health insurance industry was dealt a series of stinging defeats, most notably in the re-election of President Barack Obama, who goes into his second term with a substantial mandate and, critics fear, little reason to negotiate with Republicans. After all, the Obama administration oversaw the passage into law of both the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, both fiercely contested initiatives that would carry re-election fallout. Will a second Obama administration be even more eventful than the first? It is too early to tell, but as we go into 2013, however the dreaded fiscal cliff is dealt with will speak volumes about the political battlefield between the Democrats and the GOP. It will also set expectations for what may be accomplished — or inflicted — in the coming year. Let’s take a look at some of the most important issues on the political front-burner for the life and health insurance industry.
See also: Infographic: 2013 regulatory landscape
1. DOL fiduciary standard.
Emboldened by President Obama’s re-election, the Department of Labor will reintroduce its proposal to amend the definition of fiduciary under ERISA in coming months despite universal industry opposition. The original proposal was withdrawn in September. Phyllis Borzi, assistant DOL secretary and director of the DOL’s Employee Benefits Security Administration, said earlier this month that the “reproposal will be better, clearer, more targeted and more reasonably balanced” and that it will reflect the huge number of comments the agency received on the proposal. “We are facing a crisis of confidence and people need help,” she said.
Image: Jamie Kalamarides, Prudential Retirement’s senior vice president of Institutional Investment Solutions, right, and Phyllis Borzi, Assistant Secretary of U.S. Department of Labor shake hands on Capitol Hill in Washington on Wednesday Mar. 7, 2012. (Jose Luis Magana/AP Images for Prudential)
2. SEC fiduciary standard.
A uniform standard for sale of investment products was mandated under the Dodd-Frank financial services reform law, but the issue has languished under current SEC chairman Mary Schapiro because of strong opposition, mainly from insurance agents, who oppose any change. They argue that they sell only a limited range of products and are captive agents, which could potentially create a conflict. Schapiro left this month, and even strong supporters of a uniform standard are not optimistic that a new chairman will invest much political capital on this project.
Image: In this Dec. 6, 2011 file photo, Securities and Exchange Commission (SEC) Chair Mary Schapiro testifies on Capitol Hill in Washington. Schapiro will step down as chair of the SEC next month after a tumultuous tenure in which she helped lead the U.S. government’s regulatory response to the 2008 financial crisis. (AP Photo/Evan Vucci, File)
3. Report on insurance modernization from the Federal Insurance Office.
It had been expected that the report, mandated by the DFA for completion last January, would be released next month. That now appears unlikely, with signs emerging that the administration will delay release of the report until after a new Treasury secretary is confirmed sometime early next year. Treasury secretary Timothy Geithner has indicated that he is staying on only to help forestall the fiscal cliff. One reason for the apparent delay is that the administration doesn’t want Republicans in Congress to use the report to embarrass the administration through the confirmation process if it contains proposals calling for greater federal regulation, a politically sensitive issue.
Image: Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington, Thursday, July 26, 2012, before the Senate Banking Committee hearing: “The Financial Stability Oversight Council Annual Report to Congress.” (AP Photo/Haraz N. Ghanbari)