The Gathering Storm
The clouds are gathering and our profession and our industry must be prepared to withstand the coming storm or be swept away.
In Washington we face the possibility that after the November election the tax preferences for our industries products will come under attack.
“Pay As You Go” budget rules, now in effect in both houses of Congress require that revenue must be found for every dollar of expense Congress authorizes.
The tax benefits of life, health, disability income and long-term care insurance, as well as annuities and qualified and nonqualified retirement plans, will most assuredly be under scrutiny by the tax-writing committees of Congress, since they represent one third of the tax preferences in the US Tax Code and therefore a substantial amount of potential revenue loss for the government.
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In Albany, the New York State Commission to Modernize the Regulation of Financial Services has been working since last year to study all current financial services statutes, regulations, rules and policies and propose legislative and regulatory changes.
As part of this study, the Insurance Department has proposed a new regulation, which would set forth the broad principles governing the conduct of insurance licensees in New York. The proposed regulation is so broad in its reach that it represents a sea change in the way the NYSID will begin to regulate its licensees.
In addition recent public hearings held by the NYSID and the Office of the Attorney General have raised the specter of legislation to mandate commission disclosure and to amend current state law to abolish the long-standing anti-rebating laws.
Where is our Safe Harbor?
NAIFA (National Association of Insurance and Financial Advisors) and NAIFA-New York State provide our protection.
Earlier this year, NAIFA’s advocacy team battled a Senate proposal to cut back on the ability of many rank-and-file employees to use nonqualified deferred compensation to augment their retirement saving.
With NAIFA’s support, the House of Representatives insisted on dropping the deferred-compensation proposal. By April, the Senate agreed, but since then, there have been persistent rumors this will resurface in future legislation.
Past proposals to abolish the inside build-up of life insurance have been continuously beaten back by NAIFA’s efforts. But the attack on inside build up will return no matter who wins the White House.
In New York, Section 4228 - the law restricting agent compensation and mandating company expense limitations may be amended or abolished. The Financial Services Modernization Commission is also proposing abolishing the onerous Regulation 60. This could be good news or it could lead to worse alternatives - mandated commission disclosure and suitability requirements.
NAIFA-New York State fought for and won a place at the table with representation on the Life Insurance Working Group of the Financial Services Modernization Commission, and has testified in opposition to commission disclosure and legalization of rebating before the joint NYSID/OAG Hearings on Agent Compensation.
NAIFA and NAIFA-New York State’s ability to protect us from the legislative and regulatory storms will remain only as strong as its membership
We need to maintain the force that comes with numbers and dues dollars.
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