Legislative and Regulatory Issues

Federal Issues

Tax Treatment of Life Insurance and Annuity Products
The 75 million American families that rely on life, health, disability income and LTC insurance and qualified retirement plans for financial security have historically benefited from very favorable federal tax treatment. Increasingly, some members of Congress, the White House, and state legislatures have put forth proposals that would reduce the favorable tax treatment of life insurance industry products.

Health Care Reform
The health care reform challenge is to bring the estimated 45 million uninsured Americans into the system and to reduce the high cost of health care for everyone. Of course, these two challenges are related and one cannot be solved without tackling the other. NAIFA Health & Employee Benefits has developed principles that would support a practical solution to our health care problems. The plan, utilizing these basic principles, will help lower costs and ensure coverage is available to all citizens—without resorting to new government programs or jeopardizing the high quality of care we enjoy and expect as American consumers.

Health Insurance Law Resources | Archived Resources

Financial Services Regulatory Reform
Implementation of the Dodd-Frank Wall Street Reform Act enacted in 2010 continues to be a major focus for NAIFA in 2011. The Act called for various investor protection-related studies that will inform federal and state legislators and regulators about gaps in the regulation of financial services professionals that should be addressed. As those studies are released this year, NAIFA will continue our efforts to educate officials and the public about the unique role our members serve in providing affordable investment options to Main Street investors. NAIFA is concerned that the economic impact of excessive and duplicative regulation will result in higher costs to consumers and an erosion of affordable advice and services for the middle class.

Securities Regulation
NAIFA’s chief securities concern in 2011 is the potential impact on mid-market consumers of the possible implementation of an SEC rule imposing a fiduciary standard of care on the activities of registered representatives.
Additionally, NAIFA is actively engaged on issues such as proposed amendments to SEC Rule 12b-1, potential new broker-dealer disclosure requirements, the registration requirements of municipal advisors, and the SEC’s new “pay-to-play” rule.

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Retirement Savings Regulation
The Department of Labor (DOL) has proposed an expanded definition (under ERISA) of “fiduciary” that would apply to anyone who provides investment recommendations to employee benefit plan sponsors or participants, or even IRA holders.
The Department of Labor (DOL) has proposed an expanded definition (under ERISA) of “fiduciary” that would apply to anyone who provides investment recommendations to employee benefit plan sponsors or participants, or even IRA holders. A “seller’s exception” may exclude many commission-based advisors, but there are serious questions about how broad or workable this exception will be. A fiduciary under ERISA or the tax code cannot receive commission-based compensation unless the DOL grants a “prohibited transaction exemption” (PTE), which usually includes numerous conditions and additional paperwork requirements. ERISA fiduciaries are also subject to personal liability for failing to act solely in the interests of participants and beneficiaries.

This proposal would turn 35 years of precedent in the retirement savings market on its head, and subject brokers for IRA accounts to ERISA fiduciary regulations for the first time. NAIFA is working with the investment and retirement savings community to persuade DOL to remove IRAs from the proposed definition, and to re-propose a new definition for employer-provided retirement plans that will ensure that consumers do not lose access to affordable professional investment education and guidance.

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State Issues

State Action on STOLI
Acting in cooperation with our coalition partners, NAIFA, our state associations and their members continue to pursue aggressively legislation in numerous states to stop the spread of stranger-originated life insurance (STOLI) transactions. Despite intense opposition and large expenditures of both human and financial resources by STOLI proponents, over half of the states have acted to protect seniors and stop STOLI.

Regulating the Use of Designations
Legislators, regulators and the media have raised concerns in recent months that senior citizens are being misled and harmed by the use of certain designations and certifications by insurance agents and advisors that may imply the existence of a level of expertise in senior affairs and financial matters that, in fact, does not exist. These types of allegations are potentially damaging to NAIFA members because they affect the reputation of all agents and advisors and could compromise the public’s trust in insurance agents.