ACTION ALERTS

 Legislative Alerts!

December 5, 2010 
 
On December 5, 2010, December 5, 2010, the NAIFA – NYS, the NAIFA and the AALU released a Joint Statement pertaining to NYSID Regulation 194 (Producer Compensation Transparency).
 
 
Additionally, click here for a copy of the Circular Letter (No. 18) and the actual text of Regulation 194/
 
You are urged to PLEASE CAREFULLY READ ALL THREE (3) DOCUMENTS (AND MAKE SURE THAT YOU UNDERSTAND) THESE DOCUMENTS IN THEIR ENTIRETY.  
 
 
November 5, 2010
 
 On Friday afternoon, November 5, 2010, the NYSID released its much awaited Circular Guidance Memorandum (attached with this correspondence) entitled "Circular Letter No. 18:  Implementation of and Compliance with 11 NYCRR 30 (Regulation 194)".
  
The document seeks to answer interpretation/implementation issues pertaining to Regulation 194 (attached with this correspondence), scheduled to go into effect on January 1, 2011. 
 
 
PLEASE CAREFULLY READ (AND MAKE SURE THAT YOU UNDERSTAND) BOTH OF THESE DOCUMENTS IN THEIR ENTIRETY.
 
Pay particular attention and give further scrutiny in BOTH the actual language of Regulation 194 AND in the Circular Guidance Memorandum to Section 30.3(a) ("Mandatory Initial Disclosure"), Section 30.3(b) ("Disclosure Upon Request"), Section 30.3(d) ("Disclosure of Reasonable Estimate of Compensation"), and Section 30.6 (“Obligations of an Authorized Insurer”).
 
The two documents that are attached with this correspondence represent the NYSID’s actual Regulation and its accompanying Circular Guidance Letter.
 
Anything other than these two (2) documents that appear in print and that you may read on this subject, will be an attempt to further interpret and/or give guidance with respect to this Regulation.  Additionally, each carrier licensed in NYS will, in all likelihood,  provide their own interpretation/guidance/guidelines pertaining to the implementation of Regulation 194.  You should consult with the company that you are affiliated with, and/or with the carrier of the relevant product that you are considering offering to a client, regarding the company’s/carrier’s specific and particular requirements surrounding this Regulation, BEFORE you proceed with the sales process.
 
NAIFA - NYS, along with other trade groups (NAIFA, AALU, LICONY) and the carriers, has taken a lead advocacy role from the inception of the NYSID’s announcement regarding the intent to regulate transparency in the insurance sales process.
 
As the NYSID attempted to draft a Regulation that was intended to create transparency for the consumer in the insurance sales process, your advocacy trade association has played a significant role in ensuring that the promulgation of this Regulation (and its accompanying interpretive guidance document) did not have a chilling effect on insurance professionals' ability to provide much needed financial security to their clients, and that further recognized the important financial security benefits provided by insurance professionals and the life insurance (and ancillary) products that they offer. 
 
David A. Dreifuss, JD, MBA
NAIFA- NYS Executive Vice President 
 
August 2, 2010
 

 TO:  NAIFA – NYS Members :

Even if your practice doesn’t include healthcare and/or you are not a licensed health insurance agent, please take a few moments to urge US Department of Health & Human Services Secretary Kathleen Sebelius to include language on the new web portal required by the recently enacted Patient Protection and Affordable Care Act to specifically reference the essential part that agents play in the process.

We must continue to remind legislators and regulators that insurance agents and financial service professionals play an integral and indispensible role in providing essential (financial security) solutions and assistance to their clients, and that to cut them out of the process, will ultimately be irreparably detrimental to the American consumer.

TAKE ACTION NOW

TAKE ACTION NOW

 
Reason Action Is Urgently Needed:  The new health web portal required by the Patient Protection and Affordable Care Act (PPACA) and unveiled on July 1 does not reference consumer service provided by licensed health insurance agents.
 
Consumers should be made aware of the personalized assistance provided by state-licensed health insurance agents. NAIFA and industry partners have strongly encouraged U.S. Department of Health and Human Services Secretary Kathleen Sebelius to include agent language on the new portal. On September 21, several members of Congress joined Representative Melancon in making a similar request of HHS.
 
Contact Secretary Sebelius by clicking the TAKE ACTION link at the top of the message to request that agent language be added to the new healthcare web portal no later than October 1 when the portal is scheduled to be finalized.
 
Urge your friends and colleagues to make their voices heard as well. Remember to complete the Tell-a-Friend feature after you send your message!
 
David A. Dreifuss, JD, MBA
NAIFA- NYS Executive Vice President

 July 21, 2010

Subject: Message from the NAIFA - NYS (July 2010 Legislative/Regulatory Activity Update)

 UPDATE:The State Assembly ended its session on July 1, 2010, and gave no indication of an intention to return on or before the November elections.
 
The State Senate adjourned on July 2, 2010, and there is a possibility that they may reconvene in late July or early August in order to attempt to address State Budget revenue bills.   Here is where the NAIFA – New York Stand stands on key legislative and regulatory issues at this juncture.

 Commission Disclosure:

 As previously reported, key leadersand lobbyists from the NAIFA-NYS, NAIFAnational and the AALU meton June 22, 2010 with representatives of the NYSID in order to discuss our language suggestions for the Circular Memorandum as contained in our April and May letters (proposed NYSID issuance of a Circulatory Memorandum giving guidance with respect to interpretation/implementation issues surrounding Regulation 194 set to go into effect on January 1, 2011).
 
UPDATE:  We currently await the release of the NYSID’s draft of the Circular Memorandum,having reiterated at the June 22, 2010 meetingthe merits of our interpretive language specifically with respect to the issues of amortization of compensation, and also with respect to descriptions of as of yet unearned "secondary compensation" (i.e. business office expense allowances, attainment of production levels that entitle one to attend educational seminars, etc.).
 
Directory Item Limited Lines License:
 NAIFA - NYS submitted a Memorandum in Opposition to the limited lines license portion of this bill.
 NAIFA - NYS coordinated lobbying efforts with the Council of Insurance Brokers of Greater New York.
 
 UPDATE:  Final version of the bill did not have a limited lines license component.
 UPDATE:  The bill passed the State Senate on June 18, 2010 and State Assembly on July 1, 2010, and is awaiting action by the Governor.
 
Self Storage Facility Insurance Limited Licenses:
 NAIFA - NYS submitted a Memorandum in Opposition to the limited lines license portion of this bill.
 
UPDATE:  Despitelobbying efforts coordinated with the Council of Insurance Brokers of Greater New York, the bill, with the limited license component intact, passed the State Assembly on June 23, 2010 and the State Senate on June 25, 2010. It has not yet been delivered to the Governor for his signature.
 
Annuities Sales Standards Bill:
 As previously reported, after submittinga Memorandum in Opposition to the bill and a formal letter in opposition to the bill's assembly sponsor, we met with the Assemblyman's Legislative Director and received assurances that the Assemblyman would work with us in order to bring the proposed NYS bill in closer conformity with the NAIC Model Act.
 
UPDATE:The sponsor in the State Assembly held up floor action on the bill, and NAIFA-NYSwill continue to work with his office to amend the bill whilecoordinatingefforts and communication with the LICONY, the ACLI and the NAIFA national.
 
UPDATE:  In the interim, the NYSID has released a draft of a proposed annuity suitability regulation (Proposed Regulation 187), and has asked the NAIFA – NYS for input and comments.  We will work with the NYSID, and similarly coordinate our efforts and communications with the LICONY, the ACLI, the AALU and the NAIFA national in order to ensure close conformity of the proposed regulation with the NAIC Model Act.
 
Interstate Compact (giving single point of product approval):
As previously reported, the NAIFA – NYS submitted a Memorandum in Support of this bill, and coordinated our efforts and communication with representatives of the LICONY.
 
UPDATE:  The State Senate passed the bill (which NAIFA - NYS actively supported) on June 22, 2010. With no State Assembly companion bill, it was referred to the Assembly Insurance Committee, and there was no further action from that committee on this bill prior to the Assembly’s recess at the beginning of July.
 
The NAIFA-NYS will continue to work with the Senate sponsor and coordinate with the LICONY in order to achieve Assembly sponsorship and passage in both houses in the next legislative session, so that we can finally head towards a single point of product approval throughout the country, that will in turn give licensed producers in NYS the ability to offer beneficial products to their clients that are universally available to clients throughout the rest of the country.
 
NAIC Producer Licensing Model Act:
As previously reported, the NAIFA – NYS submitted a Memorandum in Support of proposed NYS State Assembly and State Senate bills that seek to bring New York into national conformity on issues surrounding reciprocity and uniformity of standards, but with reservations and opposition to any further expansion of limited lines licensing in NYS.
 
Representatives of the NAIFA – NYS participated in a conference call with key representatives of the NYSID with respect to our Memorandum in Support, and specifically with respect to our ongoing opposition to limited lines licenses.
 
UPDATE:  We continue to have discussions with key staff persons of both Assemblyman Morelle (Chair, NYS Assembly's Committee on Insurance) and Senator Breslin (Chair, NYS Senate's Committee on Insurance). These discussions resulted in the bill being moved to the State Assembly Codes Committee, where it remained at the time of the State Assembly’s July recess. Additionally, Senator Breslin decided not to move the bill from the Insurance Committee in the State Senate, where it remained at the time of the Senate’s July adjournment.
 
Proposed NYS Bill to Tax COLI Products:
As previously reported, the NAIFA – NYS coordinated efforts and communication with representatives of the NAIFA national, the AALU and the LICONY on this issue. We submitted a Memorandum in Opposition to the proposed bill, which called for an additional franchise tax on life insurance policies obtained by companies on its employees and /or retirees.
 
UPDATE:  We met with the Chairperson and key members of the Committee to which the bill had been assigned, to specifically request that the bill be held from any further consideration. The sponsor of the bill withdrew his request to move the bill and the bill was effectively defeated. http://www.naifanet.com/350000///Broadcast_104_350000_rnd.html?CFID=82855&CFTOKEN=80122650

_____________________________________________________________ 

 July 8, 2010:

NY High Court Takes Case on Brokers' Fiduciary Duties

The New York Court of Appeals has agreed to consider the question of whether an insurance broker breached its fiduciary duties by failing to disclose its acceptance of contingent commissions. The court accepted an appeal filed by New York Attorney General (and Democratic Party candidate for governor) Andrew Cuomo.

Both the state Supreme Court and the Appellate Division First Department dismissed the government’s case in People ex rel. Cuomo v. Wells Fargo Insurance Services Inc. The attorney general claimed that the broker allegedly breached its duty of loyalty to its clients by steering business to insurance carriers that gave it large contingent commission payments and by accepting and not disclosing those payments. In particular, he is arguing that:

  • While New Yorkinsurance brokers do not have a legal duty to recommend coverages to clients, they do have generalized duties of care and loyalty while working on a client’s behalf.
  • Because New York Insurance Law makes brokers the representatives of their clients, they owe fiduciary duties to their clients.

This case could potentially have serious implications for New Yorkinsurance brokers’ errors and omissions exposures.

NAIFA - NYS will monitor the progress of this case and report future developments.
David A. Dreifuss, JD, MBA
Executive Vice President
NAIFA – New YorkState

 http://www.naifanet.com/350000//Broadcast%5FNAIFA%2DNYS%20Legislative%20Alert%20%2D%20NY%20High%20Court%20Takes%20Case%20on%20Brokers%5F%20Fiduciary%20Duties%5FEmail%5FCurrent60%5Frnd%2Ehtml

Pre July 2010 Archives:

March 17, 2010 _ Health Care Reform!!!
Reason Action Is Urgently Needed:  The leadership of the House of Representatives is planning to release a package of changes to the Senate-passed health reform bill in hopes of passing health reform by the end of March. A manager's amendment to the package of changes may also be put together which will allow modifications to be made to the health care proposal prior to the House vote. This gives NAIFA members a last chance in the House to weigh in on key concerns.
 
NAIFA members have a number of concerns with the version of health reform currently under consideration. Whether you want to defeat the current legislation outright or work to have it "done right," the reality is that no one can predict the fate of the current effort. Accordingly, improvements to reduce costs and administrative burdens -- should the legislation become law -- are still warranted.
 
Contact your Representative to weigh in on critical issues. Specifically note that the following improvements are needed:
 
  • Remove the new 2.9 percent tax on unearned income (including annuities and possibly income recognized from the surrender or sale of a life insurance policy) - the price of health reform should not come at the expense of responsible consumers who plan for their retirement needs.
  • Include stronger individual mandate enforcement - a meaningful mechanism is needed to discourage healthy individuals from waiting until they are ill or injured to purchase coverage.
  • Drop the federal Health Insurance Rate Authority -a new federal authority would create redundant and burdensome regulation.
  • Eliminate the CLASS program from the bill - Helping people plan for their long-term care needs and allowing them to purchase quality insurance products at their place of employment should be part of our nation's answer to the long-term care financing challenge. However, there are better ways to achieve these goals than creating a new federal entitlement program.   
  • Clarify the availability of High-Deductible Health Plans and Health Savings Accounts (HSAs) in the Exchange - these plans offer affordable options and should be readily available both inside and outside the exchange.
  • Increase contribution limits to Flexible Spending Arrangements (FSAs) above the $2,500 level - limiting contributions will raise health costs for individuals with high unreimbursed health care expenses.
  • Remove the "Free Choice" vouchers - employers that sponsor generous plans for their employees should not also be required to pay a penalty or provide a voucher to employees who opt out of their employer plan.
Urge your friends and colleagues to make their voices heard. Remember to complete the Tell-a-Friend feature after you email your lawmaker!
 
 Engage the Media: Members and their constituents pay close attention to their local media. Make the voice of the agent heard by sharing your comments with the media.
 
March 15, 2010
 
As proposed legislation marches on at the federal level, concerning the overhaul of the financial services industry, insurance professionals MUST remain vigilant at every stage of the process,
and continue to have our voices heard in support of our profession,
and the financial security interests of our clients.
 
PLEASE TAKE A FEW BRIEF MOMENTS
(and have all producers you know do the same),
to voice your opposition to the proposed amendment detailed below by Senator Herb Kohl...
 
click on the link below (where prompted), and you can have your voice heard in a few brief seconds with a few clicks of the keyboard (inputting your zip code, and then when prompted your contact information).
 
 Let's stay united, resolved and vocal!!
******************************************************
Senator Herb Kohl (D-WI) recently circulated an amendment that will add yet another layer of unnecessary regulation to many already heavily-regulated NAIFA members. The amendment would be tacked onto draft legislation currently being considered by the Senate Banking Committee which would overhaul the regulation of the finance services markets.

 The amendment-introduced by the Senator at the urging of the Financial Planning Coalition-would designate "financial planning" as a recognized profession subject to federal regulation. In doing so, this amendment would create a new Self Regulatory Organization (SRO) for "financial planners." This change would impact many NAIFA members who are already regulated at many levels, including state insurance commissioners, state securities regulators, FINRA and the SEC, depending on which licenses they hold.

 Not only would this amendment create redundant and burdensome regulation, but at no point has this issue been properly studied. There have been no Congressional hearings to date, nor have there been any comprehensive studies or analyses to determine the validity of this massive change to the current regulatory regime.

 Rather than leaping into such a move, we are asking you to recommend to your Senators that they oppose this measure, and instead, support the bipartisan approach taken by Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) which calls for a full, comprehensive study of the current regulatory environment surrounding financial advising. This approach would look at all facets of current regulation, and would give the SEC rule-making authority to address any gaps.

 Click here to tell your Senator on the Banking Committee to oppose the Kohl amendment today

 Health Reform Clears Next Hurdle - December 30, 2009
 
Issue: Health Care
 
 Action Taken:  On December 24, the Senate approved its version of health reform, H.R. 3590 - 2,409 pages. The 60-39 vote was strictly along party lines.  All Democrats and the two Independents who caucus with the Democrats voted in favor and all Republicans present voted against the measure. Senator Bunning (R-KY) did not vote.
 
NAIFA Position: The Senate bill includes a number of improvements advocated by NAIFA including a specific role for agents in the reformed system; the HHS Secretary is not setting agent commissions; the public option is out; current law’s health/malpractice insurance antitrust exemption remains; there is no tax on most employer-provided health insurance; and the Flexible Spending Arrangement (FSA) annual cap is indexed.
 
NAIFA’s reform goals have been and continue to be ensuring affordable coverage for all Americans without resorting to new government programs. While the bills have been significantly improved over original drafts, NAIFA remains concerned that current proposals will increase costs to families and businesses.
 
Next Steps: The next step of the legislative process is a House-Senate conference to reconcile the differences between the Senate bill and H.R. 3962, the version approved by the House on November 7. Merging the bills is expected to be difficult due to crucial differences between the two versions of reform, including a public health insurance option in the House bill that is not in the Senate measure. Other conference issues of great interest to NAIFA members include:
  •  Antitrust & FTC Exemptions – The House bill expands the authority of the Federal Trade Commission (FTC) to prepare studies and reports on the entire insurance industry and repeals the limited antitrust exemptions in the McCarran-Ferguson Act (effective upon enactment). The Senate bill does not.
  •  High-Risk Pool – The House and Senate bills establish a temporary national high-risk pool. The House effective date is January 1, 2010 and the Senate is 90 days from enactment. 
  • Medical Loss Ratio – The House requires an 85% medical loss ratio (MLR) for all qualified health plans (2010). The Senate limits MLR to 85% for groups and 80% for individual and small group markets (2011). 
  • Annual Premium Tax – The Senate imposes an annual premium tax beginning at $2 billion in 2010 and ramping up to $10 billion annually by 2017. No provision in the House.
  • Income Surcharge - The House bill pays for the measure with an income tax surcharge slated at 5.4% for individuals earning over $500,000 annually and families earning more than $1 million annually (2011). No provision in Senate.
  • FSAs – The $2,500cap on FSA contributions is now indexed for inflation in both the House and Senate bills. The only remaining difference between the two versions is the effective date: the House version has an effective date of 2013, while the Senate’s is 2011. 
  • Exchange Structure –The House creates a new “National Health Exchange” and allows states the option of creating state or regional exchanges (2013). The Senate bill requires states to create Exchanges (2014).
  • "Cadillac Plan" Excise Tax The Senate bill imposes a 40% excise tax on premiums above $8,500 for individuals, or $23,000 for family plans (2013).  No provision in the House. 
  • Employer Obligations - The House plan requires companies with more than $500,000 in annual payroll to provide health insurance for all employees or pay a penalty of up to 8% of payroll (2013). The Senate bill requires employers with over 50 employees to pay up to $750 per employee if any of the employees rely on government subsidies to purchase health coverage (2014). 
  • Government Options – The House bill creates a government-run health plan (2013). Senate bill requires the Office of Personnel Management (OPM) to contract with insurers to offer at least two nationwide plans, one of which must be nonprofit, through the exchanges (2014).
  • Medicaid Eligibility - The House bill expands Medicaid eligibility to those with incomes up to 150 percent of the federal poverty level (2013), while the Senate bill would go up to 133 percent of FPL (2014).
  • CHIP - The House bill would end the Children's Health Insurance Program (CHIP) in 2013. The Senate bill provides funding for CHIP through fiscal year 2015.
 Both bills include similar if not identical language to reform the health insurance market and establish a national voluntary long-term care insurance program (CLASS) as well as create a Consumer Operated and Oriented Program (CO-OP) to facilitate the establishment of non-profit, member-run health insurance companies.
 
NAIFA will remain actively engaged and will attempt to further improve the legislation to meet our reform goals including efforts to ensure a government health plan is not included; to remove the government long-term care program; to establish adequate time for coordination with existing state programs and to further address affordability and sustainability of private insurance choices.

House Passes Health Reform - Nov. 7, 2009

Action Taken:  On November 7, the House of Representatives voted 220 -215 to pass its version of health reform (H.R. 3962). Thirty-nine Democrats voted against and one Republican, Cao of Louisiana, voted in favor of the bill. To see how Members of Congress voted, view the roll call vote here. To see how Members in your state voted, simply click on the “State-by-State” tab.
NAIFA Position: NAIFA President Thomas D. Currey, CLU, ChFC, LUTCF issued the following statement immediately after the vote on Saturday night.
 
"H.R. 3962 contains many provisions that NAIFA has long supported including affordability credits, wellness and prevention provisions, guaranteed issue and consumer access to professional agent services.

However, there are a number of health reform issues that need further consideration before the bill will meet NAIFA's reform goals, and we are disappointed that the House passed the bill without fully vetting these concerns. In addition to controversial health provisions, we are particularly troubled with the use of health care reform legislation to expand the FTC’s authority over all lines of insurance and to limit the McCarran-Ferguson protection of pro-competitive activities in the medical malpractice and health insurance markets.  Excessive authority is unwarranted, and would have negative impact, particularly on property-casualty and life insurers and their consumers.
 
NAIFA is dismayed by the sweeping changes to the regulation of all lines of insurance in the context of a health reform bill.

We continue to believe that the health care reform challenge can be met by bringing millions of uninsured Americans into the system and reducing the high cost of health care for everyone. We look forward to working with the Senate and the Reconciliation Conferees to address our concerns."
Next Steps: While all eyes will turn to the Senate, don't expect the Senate plan to follow the House on health care overhaul. The House bill will be deemed unacceptable to many in the Senate.
 
The details of the merged Senate bills will be released after the Congressional Budget Office (CBO) releases its analysis of the merged bills. The Senate bill is expected to be more to our liking in achieving affordable coverage for all Americans. All indicators are that it, too, will have specific authorization for agents to participate in the reformed health system. Currently, it contemplates including a government plan with a state opt-out, but indicators are that that provision will drop out during Senate floor debate.
  
The Senate process will also differ from the House floor vote which allowed limited amendment opportunities. Once the CBO score is released, the Senate debate is expected to last several weeks. Debate will include many amendments and we expect to have a number of our concerns addressed there, including strengthening the balance between penalty and purchase of insurance.
 
The Senate floor debate will not begin until after Thanksgiving. If the Senate does pass a bill, it will be different enough from the House bill that a lengthy and contentious conference is probable.
Our current strategy is to support health reform that includes a meaningful, fairly compensated role for agents, no tax on workers based on their employer-provided health insurance, meaningful coverage requirements and no public plan.  NAIFA will work to improve our issues in the Senate bill as the initiative moves toward final passage.
What You Can Do: Agents are encouraged to educate their clients and friends and to take advantage of local media opportunities. See below for links.
  • Meet with Your Senators over Veteran’s Day Recess.
  • Urge your friends and colleagues to have their voices heard.
  • Engage the Media Members and their constituents pay close attention to their local media. Make the voice of agent heard by sharing your comments with the media.
  • Visit HealthChat to read articles, view videos and  learn what others are doing. (Note: Please make sure you are logged into the NAIFA website in order to access HealthChat.) 
 ***IPA Update:*** Nov 9, 2009
 You need to contact your Member of Congress today to oppose two sections of the Investor Protection Act of 2009 (H.R. 3817) that could:
 (1) Allow the Securities and Exchange Commission to ban registered representatives of broker-dealers from receiving a commission for the sale of variable insurance products or other securities products; and
 (2) Expose registered representatives and investment advisers to increased liability for being compensated for providing personalized investment advice
 Acting now is critical because the House Financial Services Committee approved the H.R.3817 today and it is scheduled for House floor action as early as December!!!
 Ways to Contact Congress:
  • Best Impact:
  • Every NAIFA member should take a minute to send the following pre-written letter to your Member of Congress.  Simply enter your contact information and press send. If you have additional time, please edit the letter to put a personalized touch on the message. Let's flood Capitol Hill with letters!! Click here to send a letter.
 Impact of the H.R. 3817 legislation on NAIFA Members: H.R. 3817 will have huge ramifications for NAIFA members and the way you interact with your clients.  This legislation covers disclosures to investors, commission compensation, and harmonized examinations for investment advisers, broker dealers and registered representatives.
 For more information, including information on NAIFA's progress on H.R.3817 so far, click here for our Issue Brief*. or view the October 28 GovWatch here.
 *Please note that the Issue Brief can be printed and shared with your Member of Congress.

Click here to access our webinars and PowerPoint presentations on the Investor Protection Act of 2009

!!!November 6, 2009 Health Care Bill!!!

 

November 6, 2009

 
Attention:  AllRegistered Representatives of Broker-Dealers
 
Contact Your Member of Congress Today!
 
You need to contact your Member of Congress today to oppose two sections of the Investor Protection Act of 2009 (H.R. 3817) that could:
 
(1) Allow the Securities and Exchange Commission to ban registered representatives of broker-dealers from receiving a commission for the sale of variable insurance products or other securities products; and
 
(2) Expose registered representatives and investment advisers to increased liability for being compensated for providing
personalized investment advice
 
Acting now is critical because the House Financial Services Committee approved the H.R.3817 today and it is scheduled for House floor action as early as December!!!
 
 
Ways to Contact Congress:
  • Best Impact:
  • Select one person to organize a group from your NAIFA local to hold an in-person district meeting with your Member of Congress during the next Congressional recess (dates November 11-13).
  • If the Representative is unavailable, request a teleconference with the member of Congress or his/her financial services staff before November 13. Include as many NAIFA members as possible in the teleconference.
  • For instructions on how to request a meeting click here
  •  Send a Constituent Letter
  • Every NAIFA member should take a minute to send the following pre-written letter to your Member of Congress.  Simply enter your contact information and press send. If you have additional time, please edit the letter to put a personalized touch on the message. Let's flood Capitol Hill with letters!! Click here to send a letter.
 Impact of the H.R. 3817 legislation on NAIFA Members: H.R. 3817 will have huge ramifications for NAIFA members and the way you interact with your clients.  This legislation covers disclosures to investors, commission compensation, and harmonized examinations for investment advisers, broker dealers and registered representatives.
 
For more information, including information on NAIFA's progress on H.R.3817 so far, click here for our Issue Brief*. or view the October 28 GovWatch here.
 
*Please note that the Issue Brief can be printed and shared with your Member of Congress.
 
 
 
Week of October 26, 2009
 
Investor Protection Act of 2009 (IPA 2009)
The Investor Protection Act will have huge ramifications for all NAIFA members as well as ANY INSURANCE & FINANCIAL PROFESSIONAL! Your immediate attention to this legislation is critical.
 
The House Financial Services Committee is scheduled to vote on amendments to the Act THIS WEEK!
 
Why Immediate Action is Needed
Congress will mark up legislation tomorrow that would impose a fiduciary duty on registered reps,
including life insurance agents.
Life insurance agents cannot have both a fiduciary duty to two parties on opposite sides of the same
transaction-customers who buy insurance and insurers who pay agents based on sales.
Therefore, this legislation will push customers to fee-based services-even though the vast majority of Americans don't choose or can't afford the fee-based model.
At the end of the day, the clients will suffer-there will be less access to varying forms of advice and product costs will increase.
The financial plans of 65% of American families include life insurance, whereas only 17% of Americans employ a written, updated financial plan with a fee-based advisor. We must educate Congress on the marketplace.
 
YOUR HELP IS NEEDED!
It is absolutely critical that NAIFA shows a strong grassroots
force to the Members of Congress serving on the House Financial Services Committee.
Be PREPARED for the forthcoming GovAlert on the IPA 2009.
 
To access the latest legislative and advocacy information and to access the “capwiz” site to locate your local legislators and assemblymen/women, congressmen/women and senators on both the state and federal level, Go to the NAIFA NYS website at: http://naifanys.org/

NAIFA National Briefing Paper

 On Thursday, October 1, 2009 Chairman Paul Kanjorski of the House Financial Services Subcommittee and Capital Markets, Insurance, and Government Sponsored Enterprises released a discussion draft of revised legislative proposal, known as the Investor Protection Act. The original draft version of the Investor Protection Act was proposed by the Obama Administration as part of their comprehensive regulatory reform overhaul effort. The House Financial Services Committee is scheduled to consider Chairman Kanjorski’s proposal on Tuesday, October 27, 2009.

Chairman Kanjorski’s draft legislation, like the Administration’s proposal, would impose a fiduciary standard of care on broker-dealers and harmonize the standards applicable to investment advisers and broker-dealers. The call for a harmonized fiduciary standard stems from a January 2008 SEC-commissioned Rand report which found that consumers do not clearly understand the differences between investment advisers and broker-dealers. The Rand report also found that investors are generally happy with their advisers and the services they provide. The latter point is critical to keep in mind as proposals for a uniform standard of care are considered in order that the goal of harmonization does not damage the current, generally successful, nature of existing client-adviser relationships.

This issue is important to NAIFA because nearly three-quarters of NAIFA’s members are registered representatives of broker-dealer firms, and many NAIFA members are registered investment adviser representatives (IAR’s) under a corporate RIA, or have become their own Registered Investment Advisor (RIA); thus the outcome will have a significant impact on the millions of clients we serve.

NAIFA supports the efforts by the Administration and Congress to address consumer confusion about the roles of investment advisers and broker-dealers, and to better protect consumers from bad actors. However, we question whether imposing a new uniform fiduciary standard of care on all financial professionals will stop unscrupulous individuals. In our view, bad actors will continue to violate any standards of care that Congress and/or the SEC puts forth. Instead, NAIFA believes that the best way to help investors is to provide them with a clear and easy to understand disclosure about the respective roles of advisers, the nature of their contractual relationships, and the different products, advice, and services they provide. In our members’ experience, disclosure engages clients in a constructive dialogue about their financial goals and objectives and what they can expect from their financial professional. To that extent, we are encouraged by the provisions of Chairman Kanjorski’s discussion draft that call for such disclosure.

NAIFA has multiple concerns about legislative and regulatory efforts to address the problem by establishing a harmonized fiduciary standard of care for investment advisers and brokerdealers.

We believe this “one size fits all” approach overreaches in addressing the problem of consumer confusion, and fails to recognize the inherent differences in the process of selling advice for a fee as opposed to selling financial products. However, if Congress is going to move to establish a harmonized fiduciary standard of care, we encourage Members of Congress to consider the following important factors to ensure the standard both protects consumers and is practically workable for the financial professionals that serve them:

  •   The standard must call for clear and easy-to-understand disclosure about the respective roles of financial professionals, the nature of their contractual relationships, and the different financial products and services available, so the investor is in a position to make an informed decision about the products and services offered by the financial professional.
  •  The standard must preserve the ability of financial professionals to sell only products made available by the company or companies with which they are affiliated and/or with which they have a contractual relationship/agreement. 
  •  The standard must recognize the ability of financial professionals to be fairly compensated without restriction as to the manner or type of compensation arrangements, including, but not limited to commissions or fees. Compliance with a standard of care should not be determined by the manner or type of compensation received by the financial professional, but by the type of product or service provided to the consumer.

 Action Taken:  On November 7, the House of Representatives voted 220 -215 to pass its version of health reform (H.R. 3962). Thirty-nine Democrats voted against and one Republican, Cao of Louisiana, voted in favor of the bill. To see how Members of Congress voted, view the roll call vote here. To see how Members in your state voted, simply click on the “State-by-State” tab.

NAIFA Position: NAIFA President Thomas D. Currey, CLU, ChFC, LUTCF issued the following statement immediately after the vote on Saturday night.
 
"H.R. 3962 contains many provisions that NAIFA has long supported including affordability credits, wellness and prevention provisions, guaranteed issue and consumer access to professional agent services.

However, there are a number of health reform issues that need further consideration before the bill will meet NAIFA's reform goals, and we are disappointed that the House passed the bill without fully vetting these concerns. In addition to controversial health provisions, we are particularly troubled with the use of health care reform legislation to expand the FTC’s authority over all lines of insurance and to limit the McCarran-Ferguson protection of pro-competitive activities in the medical malpractice and health insurance markets.  Excessive authority is unwarranted, and would have negative impact, particularly on property-casualty and life insurers and their consumers.
 
NAIFA is dismayed by the sweeping changes to the regulation of all lines of insurance in the context of a health reform bill.

We continue to believe that the health care reform challenge can be met by bringing millions of uninsured Americans into the system and reducing the high cost of health care for everyone. We look forward to working with the Senate and the Reconciliation Conferees to address our concerns."
Next Steps: While all eyes will turn to the Senate, don't expect the Senate plan to follow the House on health care overhaul. The House bill will be deemed unacceptable to many in the Senate.
 
The details of the merged Senate bills will be released after the Congressional Budget Office (CBO) releases its analysis of the merged bills. The Senate bill is expected to be more to our liking in achieving affordable coverage for all Americans. All indicators are that it, too, will have specific authorization for agents to participate in the reformed health system. Currently, it contemplates including a government plan with a state opt-out, but indicators are that that provision will drop out during Senate floor debate.
 
 
The Senate process will also differ from the House floor vote which allowed limited amendment opportunities. Once the CBO score is released, the Senate debate is expected to last several weeks. Debate will include many amendments and we expect to have a number of our concerns addressed there, including strengthening the balance between penalty and purchase of insurance.
 
The Senate floor debate will not begin until after Thanksgiving. If the Senate does pass a bill, it will be different enough from the House bill that a lengthy and contentious conference is probable.
Our current strategy is to support health reform that includes a meaningful, fairly compensated role for agents, no tax on workers based on their employer-provided health insurance, meaningful coverage requirements and no public plan.  NAIFA will work to improve our issues in the Senate bill as the initiative moves toward final passage.
What You Can Do: Agents are encouraged to educate their clients and friends and to take advantage of local media opportunities. See below for links.
  • Meet with Your Senators over Veteran’s Day Recess.
  • Urge your friends and colleagues to have their voices heard.
  • Engage the Media Members and their constituents pay close attention to their local media. Make the voice of agent heard by sharing your comments with the media.
  • Visit HealthChat to read articles, view videos and  learn what others are doing. (Note: Please make sure you are logged into the NAIFA website in order to access HealthChat.)
 Contact Your Member of Congress Today!
 ***IPA Update:*** Nov 9, 2009
 You need to contact your Member of Congress today to oppose two sections of the Investor Protection Act of 2009 (H.R. 3817) that could:
 (1) Allow the Securities and Exchange Commission to ban registered representatives of broker-dealers from receiving a commission for the sale of variable insurance products or other securities products; and
 (2) Expose registered representatives and investment advisers to increased liability for being compensated for providing personalized investment advice
 Acting now is critical because the House Financial Services Committee approved the H.R.3817 today and it is scheduled for House floor action as early as December!!!
 Ways to Contact Congress:
  • Best Impact:
  • Every NAIFA member should take a minute to send the following pre-written letter to your Member of Congress.  Simply enter your contact information and press send. If you have additional time, please edit the letter to put a personalized touch on the message. Let's flood Capitol Hill with letters!! Click here to send a letter.
 
Impact of the H.R. 3817 legislation on NAIFA Members: H.R. 3817 will have huge ramifications for NAIFA members and the way you interact with your clients.  This legislation covers disclosures to investors, commission compensation, and harmonized examinations for investment advisers, broker dealers and registered representatives.
 For more information, including information on NAIFA's progress on H.R.3817 so far, click here for our Issue Brief*. or view the October 28 GovWatch here.
 *Please note that the Issue Brief can be printed and shared with your Member of Congress.

 Health Reform Clears Next Hurdle  -  Date: December 30, 2009

 Issue: Health Care
 
 
Action Taken:  On December 24, the Senate approved its version of health reform, H.R. 3590 - 2,409 pages. The 60-39 vote was strictly along party lines.  All Democrats and the two Independents who caucus with the Democrats voted in favor and all Republicans present voted against the measure. Senator Bunning (R-KY) did not vote.
 
NAIFA Position: The Senate bill includes a number of improvements advocated by NAIFA including a specific role for agents in the reformed system; the HHS Secretary is not setting agent commissions; the public option is out; current law’s health/malpractice insurance antitrust exemption remains; there is no tax on most employer-provided health insurance; and the Flexible Spending Arrangement (FSA) annual cap is indexed.
 
NAIFA’s reform goals have been and continue to be ensuring affordable coverage for all Americans without resorting to new government programs. While the bills have been significantly improved over original drafts, NAIFA remains concerned that current proposals will increase costs to families and businesses.
 
Next Steps: The next step of the legislative process is a House-Senate conference to reconcile the differences between the Senate bill and H.R. 3962, the version approved by the House on November 7. Merging the bills is expected to be difficult due to crucial differences between the two versions of reform, including a public health insurance option in the House bill that is not in the Senate measure. Other conference issues of great interest to NAIFA members include:
 
  • Antitrust & FTC Exemptions – The House bill expands the authority of the Federal Trade Commission (FTC) to prepare studies and reports on the entire insurance industry and repeals the limited antitrust exemptions in the McCarran-Ferguson Act (effective upon enactment). The Senate bill does not. 
  • High-Risk Pool – The House and Senate bills establish a temporary national high-risk pool. The House effective date is January 1, 2010 and the Senate is 90 days from enactment.  
  • Medical Loss Ratio – The House requires an 85% medical loss ratio (MLR) for all qualified health plans (2010). The Senate limits MLR to 85% for groups and 80% for individual and small group markets (2011).  
  • Annual Premium Tax – The Senate imposes an annual premium tax beginning at $2 billion in 2010 and ramping up to $10 billion annually by 2017. No provision in the House.
  • Income Surcharge - The House bill pays for the measure with an income tax surcharge slated at 5.4% for individuals earning over $500,000 annually and families earning more than $1 million annually (2011). No provision in Senate.
  • FSAs - The $2,500 cap on FSA contributions is now indexed for inflation in both the House and Senate bills.  The only remaining difference between the two versions is the effective date: the House version has an effective date of 2013, while the Senate's is 2011.  
  • Exchange Structure –The House creates a new “National Health Exchange” and allows states the option of creating state or regional exchanges (2013). The Senate bill requires states to create Exchanges (2014).
  • Senate bill imposes a 40% excise tax on premiums above $8,500 for individuals, or $23,000 for family plans (2013).  No provision in the House. 
  • "Cadillac Plan" Excise Tax – 
  • Employer Obligations - The House plan requires companies with more than $500,000 in annual payroll to provide health insurance for all employees or pay a penalty of up to 8% of payroll (2013). The Senate bill requires employers with over 50 employees to pay up to $750 per employee if any of the employees rely on government subsidies to purchase health coverage (2014). 
  • Government Options – The House bill creates a government-run health plan (2013). Senate bill requires the Office of Personnel Management (OPM) to contract with insurers to offer at least two nationwide plans, one of which must be nonprofit, through the exchanges (2014). 
  • Medicaid Eligibility - The House bill expands Medicaid eligibility to those with incomes up to 150 percent of the federal poverty level (2013), while the Senate bill would go up to 133 percent of FPL (2014). 
  • CHIP - The House bill would end the Children's Health Insurance Program (CHIP) in 2013. The Senate bill provides funding for CHIP through fiscal year 2015. 
Both bills include similar if not identical language to reform the health insurance market and establish a national voluntary long-term care insurance program (CLASS) as well as create a Consumer Operated and Oriented Program (CO-OP) to facilitate the establishment of non-profit, member-run health insurance companies.
 
NAIFA will remain actively engaged and will attempt to further improve the legislation to meet our reform goals including efforts to ensure a government health plan is not included; to remove the government long-term care program; to establish adequate time for coordination with existing state programs and to further address affordability and sustainability of private insurance choices.


NAIFA-NYS Association Offices are located at:
300 Merrick Rd., Ste. 410, Lynbrook, NY 11563
 
Phone:  516-324-1695   Fax:  516-593-0160
 David Dreifuss, Executive Vice President Email:  ddreifuss@taifp.com 
NAIFA-NYS Email: naifanys@gmail.com