In advance of the National Association of Insurance and Financial Advisors’ (NAIFA) Career Conference and Annual Meeting, being held September 28-October 1 in San Antonio, NU Senior Editor Warren S. Hersch interviewed NAIFA President-elect John Nichols and Diane Boyle, NAIFA’s vice president of federal government relations. The interview explored legislative, regulatory and other issues of concern to NAIFA members and initiatives underway at the 123-year-old organization. The following are excerpts.
Hersch: What are the major legislative and regulatory issues facing NAIFA’s leadership and its members this year? How prominently does the Patient Protection and Affordable Care Act (PPACA) figure among them, given the current debate in Congress about defunding “Obamacare?”
Nichols: Overall, the legislative adversity we as an industry face is challenging our way of life and could have a significant impact. The challenges are multiple: proposed fiduciary standards for investment and retirement plan advisors, commission disclosure, threats to the tax-favored treatment of life insurance, the Affordable Care Act, among others.
We view the Affordable Care Act as not only a challenge, but also an opportunity to showcase our talents, skills, knowledge and resources. NAIFA provides these on three levels: for advisors needing professional development education; for business people who turn to trusted advisors for information and guidance on the ACA; and for organizations, hospitals among them, that reference NAIFA as a resource on the ACA. Implementation of the ACA is coming — and we’re preparing for it.
Boyle: We have a two-phase strategy to address the legislative as well as the regulatory and implementation phases. On the legislative side, we’re lobbying for changes we think can be made to improve the new law. We’re also working with the Center for Consumer Information and Insurance Oversight and our agents to ensure they have the training to help consumers obtain coverage in the state exchanges.
Regarding legislative improvements, we want to see a change in the medical loss ratio or MLR, which has resulted in a decrease in agent commissions. You don’t want agents leaving the business at a time when consumers most need information and guidance on health care options.
We’re also looking to secure improvements respecting ACA provisions regarding health savings accounts in high-deductible plans, the 3.8 percent surtax on investment income, as well as limitations on flexible spending accounts and on tax subsidies that currently are only available inside the exchanges. We want people to have health insurance coverage — whether within, or outside of, the exchanges.
Hersch: In the coming debate over tax reform, what are the critical issues in so far as the impact of reform on life insurance products? Where you do perceive to be the greatest opportunities and challenges?
I don’t think we’re going to see tax reform happen until next year. That said, we intend to remain vigilant about protecting the tax-favored treatment of our products. To that end, we brought 1,000 people to Capitol Hill earlier this year to tell NAIFA’s story — the value our members deliver to the 75 million families that own our products. We’re planning to do a “Day on the Hill” briefing again in 2014 during our next Congressional Conference, which is scheduled to take place May 20-21. Hersch: Turning to fiduciary standards being considered by the SEC and the DOL, what language are you hoping for in future proposed rules? How might less-than-desirable standards negatively affect NAIFA’s members and their clients?
Nichols: The concern we have in respect to proposed fiduciary standards from both agencies is the potential impact on the middle market. We want to ensure neither agency comes out with any definition of a fiduciary that would adversely affect folks in this market space.
Hersch: Do either of you fear that new fiduciary standards may lead to fewer advisors serving the middle market, as has happened in the U.K. under that nation’s new regulatory regime?