PURPOSE OF LEGISLATIVE SPOTLIGHT
LEGISLATIVE SPOTLIGHT is produced by NAIFA and is supplied to the Society of Financial Service Professionals as a collaborative effort that seeks to raise federal and state regulatory awareness for financial service professionals. The essential purpose is to facilitate understanding and a more fruitful dialogue with constituents and/or clients with regard to these important issues.

Speaking as one, we can and will make a difference.

Comments on Legislative Spotlight: Contact Ron Panneton with comments or suggestions concerning this newsletter.

NAIFA Government Relations Team Warns of Threats to Industry

At their Annual Conference in early September NAIFA’s Government Relations Team provided updates on developments in Washington D.C. and in statehouses nationwide during the Legislative Forum held during the second day of the meeting. The group addressed the legislative and regulatory efforts that pose potentially serious threats to life insurance professionals, including Congressional action to address end-of-year deadlines and tax reforms that could circumscribe or eliminate the tax-favored treatment of life insurance.

100 Year Anniversary-2013 Congressional Conference

NAIFA’s Senior Vice President of Government Relations William Anderson started the Forum off by reminding attenders that nearly 100 years ago, NAIFA members were instrumental in ensuring that life insurance benefits would not be subject to the then-new federal income tax. Anderson emphasized that today, NAIFA must continue its advocacy efforts to educate Congress on the importance of life insurance and annuities to the American public.

Anderson stated that efforts are ramping up to ensure tax reform does not threaten these products, the agents who sell them, or the families and small businesses who rely on them for financial protection. Anderson mentioned that these efforts will include the NAIFA 2013 Congressional Conference, scheduled for April 8-9, 2013, when life insurance agents will take their case directly to Congress in meetings with members and staff on Capitol Hill.

Fiscal Cliff—Danea Kehoe spoke of the impending “fiscal cliff”, and the consequences of Congress failing to act by year-end on an estimated $7 to $10 trillion in federal spending and tax rules. Topping the list Ms. Kehoe indicated is the expiration on December 31 of the Bush tax cuts implemented in 2001 and extended in 2003.

Kehoe mentioned several other deadlines, including one in 2013 respecting the federal government’s debt ceiling limit, which will need to be raised to cover expenditures and interest on the national debt; and, within the next three weeks, a bill to prevent a government shutdown.

Preserving 100 Years of Tax-favored Treatment of Life Insurance

Diane Boyle, Vice President of Federal Government Relations, said that revenue enhancing measures, such as the closing of tax loopholes and the elimination of “tax expenditures,” including potentially the tax-deferred treatment of cash value life insurance, will likely be among proposals contained in a tax reform plan mandated by April 30, 2013 by House bill H.R. 6169.

Boyle said that Republicans and Democrats agree that tax reform must engender lower tax rates and a broadening of the tax base, but they disagree on the means by which these goals are attained. Republicans demand that taxes not be raised, whereas many Democrats don’t want to see cuts to entitlement programs. Boyle said that “These proposals present challenges to our industry and we need to be able to communicate our concerns about them to Congress.” She encouraged all who could attend to participate in the April 2013 Congressional Conference.

Modifications to the 2010 Patient Protection and Affordable Care Act Being Sought

Boyle noted that NAIFA is seeking modifications to the PPACA, which resulted in 21 additional taxes totaling $1 trillion in revenue. She stated that the advocacy efforts to date yielded one positive development: H.R. 1206, NAIFA-backed legislation designed to address the negative consequences of PPACA’s medical loss ratio (MLR) provision. The bill, she said, is expected to pass the House, laying the foundation for enactment next year.

McCarron-Ferguson Act’s Federal Anti-trust Exemption Retained

Scott Sinder, an outside counsel for NAIFA at Steptoe & Johnson LLP, mentioned successful lobbying efforts during the year to defeat an amendment introduced in the House by Rep. Paul Gosar (Rep.-AZ) that would have repealed the McCarron-Ferguson Act’s federal anti-trust exemption for the “business of health insurance.” Had the amendment passed, life insurance and annuities would have been subject to a federal anti-trust regulator, in addition to the current state regulators. Sinder indicated that, “The last thing insurers need is an anti-trust regulator on top of the state regulators questioning their judgments.”

NAIFA Backs FINRA as SRO for Investment Advisors

Jill Hoffman, NAIFA’s Assistant Vice President of Federal Government Relations, said that NAIFA is also backing an industry push to make FINRA the self-regulatory organization (SRO) for investment advisors. Recalling testimony by NAIFA Past President Tom Currey before Congress on June 6, Hoffman noted that NAIFA prefers this option to the alternatives, such as requiring investment advisors to pay the SEC a user fee to fund their exams or establishing a new SRO for investment advisors.

Hoffman noted that, “We believe that making FINRA the SRO is the best solution of all the options available because it will mean that advisors are subject to one master, and not multiple organizations examining you on an individual basis.”

Why It Matters: To ensure that American families and businesses continue to receive tax-free death benefits and inside build-up on their insurance products.

To Learn More: Contact Contact Diane Boyle Bill Anderson at dboyle@naifa.org.

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