NAIFA-New York Works to Make Regulation 60 Less Burdensome

February 3rd, 2015, Comments Off.

Thanks largely to the lobbying efforts of NAIFA-New York State, the New York State Department of Finances has amended Regulation 60 to allow insurers to accept applications immediately and issue disclosures later, before the policy goes into effect.

This will speed up the processing of applications and reduce the difficulty of complying with the regulation for consumers and advisors. It should also reduce a problem that emerged when insurers would have to revise the disclosure documents to account for changes that occurred during the waiting period.

“We congratulate and thank the New York State Department of Finances and its Life Bureau for working with us to accomplish this amendment,” said NAIFA-New York President Lawrence J. Holzberg. “This reform will bring positive and necessary changes that will allow NAIFA members to better serve their clients’ interests safely and securely.”

Regulation 60 is a well-meaning measure designed to protect consumers from unwanted or unnecessary replacements of existing life insurance or annuity policies. In practice, however, it has forced consumers (and their advisors) who are certain they want to replace their policies to jump through regulatory hoops and endure lengthy, unnecessary delays.

Passed in 1999, the regulation requires anyone applying for a life insurance policy or annuity contract in New York to authorize the insurer to obtain information about any existing coverage they may hold. The insurer then must provide standard disclosures comparing the existing policies to the new one.

Many states have similar regulations. What makes Regulation 60 in New York different and more burdensome is that it imposes a 26-day waiting period to allow the insurer time to gather information and prepare the disclosures, which must be completed before the insurance company can even accept an application from the consumer.

The delay is mandatory even if the differences in the old and new coverages are obvious. The benefits of the new coverage, such as a lower price for the same coverage or extended coverage, may be readily apparent, but the waiting period still applies. Because of this, the insurer cannot begin processing the application or completing any underwriting requirements until after the waiting period, which can draw out the process well beyond 26 days.

In the end, the amended Regulation 60 will give the same consumer protections it has always given but will streamline the process of complying with the regulation. This, in turn, will reduce the frustration of consumers who legitimately want or need to replace an outdated insurance policy or annuity contract.



NAIFA Legislative Forum

September 8th, 2014, Comments Off.

The NAIFA Government Relations team provided their annual legislative update to attendees at NAIFA’s Career Conference and Annual Meeting.

Agent Licensing

NARAB II is legislation that will create a national, not federal, insurance licensing program. Under the proposed legislation, producers must be licensed in their home states, pay the licensing fee for every other state in which they are licensed, meet NARAB membership qualifications, and undergo criminal background checks.

NARAB II is included in terrorism risk insurance act (TRIA) legislation moving through both the House and Senate. TRIA must be enacted by the end of this year and there is strong political will to see it passed. NAIFA staff told members that NARAB will be enacted into law this year.

After that happens, NAIFA will work to ensure membership qualifications, which will be set by the NARAB board, are appropriate and coordinated with FINRA regulations to ease the burden on advisors and both organizations.

 Tax Reform

The congressional Joint Committee on Taxation estimates that $3.2 trillion in tax expenditures are from the insurance and financial services industry. Nearly 45 percent of all tax expenditures and four of the top ten are related to products and programs important to NAIFA. These expenditure represent a huge target for members of Congress looking to implement tax reform.

The good news is that no current tax reform proposals would tax the inside buildup of life insurance. However, November’s elections will bring new members of Congress and potentially new proposals. The Camp discussion draft released earlier this year would extract $583 billion from life insurance interests. While the draft is unlikely to be enacted in its entirety, provisions within the draft could serve as the basis for future legislation. So it remains as important as ever for NAIFA to remain vigilant in its advocacy efforts in this area.

Department of Labor Fiduciary

The Department of Labor would like to re-define who is a fiduciary in providing education, information and advice to retirement account holders, including 401(k)s and IRAs. NAIFA is concerned because DOL has refused to meet with industry representatives and because the new rule may prohibit advisors from offering advice, even if it is in the best interests of the plan and its participants.

In response to advocacy, DOL has delayed the possible release of fiduciary regulations until at least January 2015. Thanks to the work of NAIFA and industry partners, a number of groups within Congress, including the New Democrats, Small Business Committee, Congressional Black Caucus and the Hispanic Caucus have written letters expressing concerns over the DOL’s process on the issue.

In the states, NAIFA has successfully lobbied the NAIC and HHS to ensure that regulations prohibit health exchange navigators from recommending insurance policies unless they are licensed as insurance agents. The NAIFA Board approved an official policy position that “Navigators should not sell, solicit, recommend or negotiate insurance coverage unless licensed on same basis as insurance advisors. NAIFA is also monitoring state exchanges that are considering selling non-health insurance products.  Thanks to NAIFA’s advocacy efforts, no state has yet to do this.

Finally, NAIFA staff explained that “grassroots will rule the policy debates in the next Congress.” Nearly half of lawmakers have less than six years of experience in Congress. Also fewer than half of the members of Congress have business backgrounds. Members of Congress need the knowledge and expertise of NAIFA members more than ever. At the same time, congressional campaigns cost more than ever. In 2012, the average amount raised by congressional winners over $1.5 million last election cycle. This makes IFAPAC, which is the largest political action committee in the life insurance field, more important than ever.