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Life Health > Health Insurance > Your Practice

NAIFA sees challenges, opportunities in PPACA

By Warren S. Hersch

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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 Diane Boyle, NAIFA’s vice president of federal government relations.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?

Boyle: If, say, a revised DOL standard is little different than one the agency earlier proposed and subsequently withdrew, then yes. With the original proposal, the mindset was that if you were paid on a commission basis, then the information you provide the client conflicts with, or can’t be in the best interest of, the client. This absolutely is of concern to us.

Nichols: Also of concern would be a harmonized fiduciary standard applying to investment advisors and broker-dealers subject to regulation by the SEC. Under such a standard, could our members serve all Americans appropriately? We don’t think so. Those in the middle class will be the ones who get squeezed.

Hersch: What do you hope to achieve from an advocacy perspective at this year’s annual meeting in respect to the above regulatory and legislative issues? What other advocacy initiatives are you undertaking?

Nichols: We will showcase our advocacy efforts and victories during the year past. We also have set a goal — one we expect to exceed — of raising $130,000 for our political action committees, IFAPAC and APIC. Our professional staff will also be out in force to continue the education process for participating members and association leaders. This is critical, so attendees can go back to their state and location associations to educate the members at large about the key legislative and regulatory issues we face as an association.

Hersch: How well is NAIFA doing in terms of its professional development and membership growth objectives? NAIFA President-elect John Nichols

Nichols: We continue to build and improve on member benefits and programs through the efforts of our professional development staff. In 2012, we recorded some 37,000 uses of our trackable programs, such as webcasts. This past year, the number grew to over 55,000. So we know we’re on the right path to delivering high-quality value for our members and improving our curriculum to help them grow their practices.

As to membership, we’ve created a partnership program, allying with our state associations to help leverage NAIFA’s people, resources and programs at the national level. To cite one example, NAIFA national’s staff recently co-promoted a state association conference that resulted in a dramatic improvement in the event’s participation rate and member experience.

We’re also planning to unveil a member engagement program throughout the federation, the purpose of which is to build a depth of relationships through engagement in order to create a positive member experience. And we’ll do that by understanding what the needs are of the members, then delivering the people, resources and programs they want. As a result of these efforts, they’ll have a better member experience.

Lastly, we still have very strong corporate partner relationships, among them one with Thrivent Financial, under whose sponsorship 800 Thrivent advisors joined NAIFA this past year. That speaks volumes to our corporate partnership efforts.

Hersch: What is NAIFA’s member recruitment goal this year? Is the 100,000-member benchmark — an objective of the association in prior years — still a targeted and realizable number?

Nichols: We’re not going to define our success in terms our membership total — currently between 43,000 to 44,000  —nor member recruitment objectives. Our success will be defined by the active involvement and engagement of our existing members; by becoming the association of choice for insurance and financial service professionals who are looking to grow and protect their practices; and by serving as a role model for positive, ethical conduct. That’s what we’re all about.

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