GovPod: NAIFA Advocacy Podcasts

National Association of Registered Agents and Brokers: NARAB II

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ANDY MOYER: Welcome to NAIFA’s GovPod, the podcast about important legislative issues affecting the insurance industry.  I’m Andy Moyer, Communications Producer for NAIFA.  Lately there’s been a lot of discussion on Capitol Hill about the federal role in insurance regulation.  An agent licensing proposal called NARAB II has been gaining traction with several members of Congress.  Today we’re speaking with Scott Sinder and John Fielding of the D.C. law firm Steptoe and Johnson, an outside counsel to NAIFA.  Scott, John, thank you for joining us on our podcast today. 

SCOTT SINDER: Thanks for having us.

JOHN FIELDING: Happy to be here.

ANDY MOYER: All right, John, let’s start with you.  Why don’t you tell us what NARAB II is.

JOHN FIELDING: NARAB II is a proposal that would allow agents and brokers to have a single point of filing for their non-resident licenses.  Essentially, the NARAB entity would be created, the entity itself would be comprised of regulators, industry and other, I suppose, interested individuals who would be appointed by, as it’s currently proposed, the President, and the entity would essentially set standards and provide for the licensing structure so that a—an agent or broker who has a resident license in the state could then apply to NARAB and obtain non-resident licenses in one or all the other states and jurisdictions in the United States.

ANDY MOYER: What’s the difference between this and the optional federal charter?  Scott, can you explain that to us?

SCOTT SINDER: Sure, Andy.  The optional federal chartering proposal is a broader proposal that would encompass insurance company chartering, as well as kind of market conduct, and it’s cradle-to-grave regulation for those who opt into the system, both carriers and producers.  I kind of view the proposal as an OFC for agents.  It’s just more limited in that it’s only a licensure piece and doesn’t cover the other areas of regulation that a full-blown optional federal chartering regulator would.

ANDY MOYER: What exactly prompted this NARAB proposal?

SCOTT SINDER: In the original version of NARAB what it basically did is it set up a bogey.  It said that unless a majority of the states and territories, which if you add it all up is 29, unless 29 states establish either reciprocal or identical licensing regimes for agents and brokers, then there will be created an entity called the National Association for Registered Agents and Brokers (NARAB).  The problem is…  There are several problems.  One is not enough states really hit the bogey from a pragmatic perspective and some of the states that didn’t are the big states.

California, Florida, for example, they are not part of the reciprocal licensing regime that many of the states established, and so you have this non-participation.  The second problem is that the original legislation excluded agencies.  It only applied to individual licensure.  And so there’s a basket of problems associated with agency licensure.  Those went unaddressed in ’99.  The new proposal would seek to resolve these.  It would go ahead and immediately establish what’s, in essence, a federal licensing entity.

ANDY MOYER: What are the prospects for its passage?

SCOTT SINDER: You know, my view is that in the near term the prospects are difficult because some of the initial supporters of this bill, they are seeking to have it enacted partially in an effort to resolve the agency licensure issues but also in an effort to try to basically obviate the need for the creation of a broader, optional federal regulator.  And you can sort of see the problem with that.  One of the most visible problems is that it’s gonna become the kind of—the puppet in the debate between those who wanna know option federal charter and those that don’t.

You see this even more profoundly in the way they’ve tried to structure this new entity.  This is an entity that has two levels of federal power.  It has the federal power to create licensure standards, who is it that’s eligible to be a member of NARAB, and that membership gives you federal benefits.  And the benefit is that by paying a fee you’re automatically licensed in any other state you want to as long as you pay the fee associated with each individual license. 

The second federal power that they have is to determine who it is that’s satisfied their rules.  This is sort of typical federal regulatory power.  I think, from the NAIFA perspective, while we are still exploring what the ultimate position of the—of the trade association should be with respect to the larger questions, there’s no innate fear or hatred of a federal presence.  It’s more how that would be constructed, what it would mean in the real world. 

And so if you … I think if we argued that this is an optional federal regulatory regime for life insurance agents, I don’t know that that’s inherently problematic in any way from our trade association’s perspective. 

JOHN FIELDING: This is also a means, I think, of pushing the states and the state regulators to continue to reform and push for modernization of the producer licensing regime across the country.  And in that way NARAB II, like OFC, like other federal efforts, can be helpful to NAIFA in terms of accomplishing some reform goals even just by the fact of it being out there.

ANDY MOYER Now why should our NAIFA members really care about this proposal?  How is it going to directly affect their business? 

SCOTT SINDER: It affects any licensed agent or broker that’s doing business in more than one jurisdiction.  But if you’re somebody who does business in several states or you’re doing group business on a national basis, then what this should do, if it’s properly effectuated, is it should greatly reduce your licensure burden costs, because rather than having to satisfy all the different state requirements and all the different state schedules for licensure, which is probably most important, you’d be able to do it with a single, seamless process once a year.  And so I think that it should become a much easier burden to satisfy.

ANDY MOYER: You wanna add anything, John?

JOHN FIELDING: I think we’ll see a streamlining of some of the requirements across the states as well because I think it does put pressure on the states to come together in terms of some of their whether it’s administrative requirements or substantive requirements in terms of licensing.

SCOTT SINDER: You know, one point I’d like to make clear is that it’s not gonna mean that anyone that’s any less qualified than they have been historically can be licensed.  In fact, to be qualified to be eligible for the NARAB privileges of this multistate licensure the statutory language will dictate that standards have to be established that match the highest standards of any state.  And so you’re gonna have to be a well-qualified life agent, for example, in order to qualify for these benefits.

ANDY MOYER: Is there anything that our NAIFA members should be doing about this proposal?

SCOTT SINDER: I think at this point it’s something that we’re watching very closely and that once we actually see a real proposal…  Remember, we have not seen final legislative language and so it’s not a concrete proposal yet.  We need to make sure that it satisfies all the NAIFA objectives that we’re trying to accomplish in the licensing realm, and if it does, at the right moment I think that the NAIFA government relations staff will send out the call to arms in order to get folks to weigh in with their members of Congress with their support of the proposal.

JOHN FIELDING: With all of these proposals, I think one of the most important things that NAIFA members can do is keep up to speed on what’s going on.  And I think that the NAIFA government relations group, I know they send out a lot of information about what’s going on here in Washington and I think to stay educated and to stay up to speed on things so that members themselves can give feedback both to the government relations group at NAIFA and to the Hill as necessary is a really good idea.

ANDY MOYER: John, Scott, thank you very much for being on our podcast and giving your information to us.  We really appreciate it.

SCOTT SINDER: Well, thanks for having us.  We’re [sic] always love to be with NAIFA.

JOHN FIELDING: Our pleasure. 

ANDY MOYER: NAIFA encourages you to learn more about NARAB II by logging onto NAIFA’s website at www.naifa.org.  Membership in NAIFA is all about your success.  We give you the tools you need to grow your business and propel your career as an insurance or financial advisor.  Learn more about becoming a NAIFA member and join today at www.naifa.org/join.  This 2008 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors.  All rights are reserved. 

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The State of the States: February 1, 2008

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ANDY MOYER: Welcome to NAIFA’s GovPod, the podcast about important legislative issues affecting the insurance and financial services industry. I’m Andy Moyer, communications producer for NAIFA. In our January GovPod, we explored the potential pros and cons for NAIFA members of the optional federal charter, a national insurance regulatory proposal gaining momentum in Congress. And while the issue of federal regulation is important, the states are now and will remain a driving force behind insurance regulations.

NAIFA is fully committed to helping states improve their regulatory systems and protecting the interests of NAIFA members. In this podcast, we’ll hear how state regulators and legislators are responding to the concerns of NAIFA members and what NAIFA’s doing to help. To discuss these important matters, I’d like to welcome NAIFA’s Senior Vice President of Law and Government Relations, Bill Anderson, and NAIFA’s General Counsel, Michael Gerber. Bill, Michael, thank you for joining us on our GovPod today.

MICHAEL GERBER: Our pleasure.

BILL ANDERSON: Yes. Glad to be here.

ANDY MOYER: Bill, can you tell us why there’s a call to improve state insurance regulation and what the states are doing about it?

BILL ANDERSON: Well, with over fifty jurisdictions, there is a tremendous lack of uniformity among state regulation. But working together, as the National Association of Insurance Commissioners, the NAIC, state insurance regulators have met the challenge of federal efforts to reform insurance regulation by putting together their own plan to modernize insurance regulation. The NAIC’s modernization plan seeks to improve state regulation by tackling many of the same issues addressed by federal proposals such as streamlining the agent licensing process and improving the speed to market conditions for insurance products.

ANDY MOYER: You mentioned the agent licensing. Why is this an issue?

BILL ANDERSON: Because there are tremendous differences in agent licensing rules throughout the country, there are obstacles to non-resident licensing. And there are tremendous costs for the agent associated with attempting to comply with all the various regulations throughout the country.

ANDY MOYER: Michael, have the states done anything about their inconsistent agent licensing laws?

MICHAEL GERBER: Absolutely. You know, in light of all the problems that Bill just briefly summarized, the states have done quite a lot in the last ten years or so to streamline the agent licensing process and to help make it more uniform nationwide. Um, back I guess in around 1999 when Congress passed the Gramm-Leach-Bliley Act, the states were really forced to take action in this area and to start cleaning up their inconsistent licensing rules for the first time. Because if they didn’t, then they face the prospect that a federal entity was going to be created that was going to handle the agent licensing system for them. And the main impetus for this sort of federal legislation was to remove barriers to obtaining nonresident licensing.

So the NAIC took action. They responded to this federal threat and they developed what’s called a Producer Licensing Model Act or the PLMA. And that’s the type of basic framework for state agent licensing regulation. And by now, most states have adopted the PLMA in one form or another. And that’s made state licensing laws much more uniform than they ever were before. And in addition to that, the NAIC has since then adopted a set of uniform resident licensing standards.

And that’s meant to help encourage states to achieve greater uniformity in actual licensing requirements in areas like pre-licensing education and continuing education and license terms, how long ... how long a license is in effect. But having said all that, as Bill mentioned, there’s still a lot of inconsistency in agent licensing rules from state-to-state and a lot of areas for improvement in the agency licensing system. Fortunately, states have made a lot of headway in the past few years for making licensing laws more consistent around the country than they were before.

ANDY MOYER: How have these licensing laws impacted NAIFA members and other insurance agents?

MICHAEL GERBER: Well, the implementation of PLMA across the country has definitely made the licensing process easier for agents than it was in the past. I mean, for NAIFA that’s the real goal of trying to improve the agent licensing process. We know that the less time members spend filling out licensing paperwork, the more time they have to do what they want to do. And that’s going out to help families and businesses achieve financial security. And one recent achievement for the states in this area has been the development of online agent licensing systems by NIPR, the National Producer Licensing Registry.

The development of NIPR, which is an affiliate of the NAIC, owes its success in large part to this greater consistency that we now have in agency licensing laws thanks to the PLMA. And what the online NIPR system does is it allows agents with active resident licenses in any state to apply for a nonresident license for multiple states, all with a single form, all done online at one time with a very quick turnaround time. And this is a vast improvement from a few years ago, when all nonresident licenses had to be applied for with separate forms that you had to fill out by hand and mail in to the separate insurance departments all over the country with a much slower turnaround time.

And by the way, you can access this online, nonresident licensing system through NAIFA’s website. And NIPR has had other developments in recent years. One is a request system that lets agents complete address changes from multiple states using a single online form. And they have a growing system of online resident licensing. When you put this all together, you can see that a lot has been done to make the agent licensing system much easier for NAIFA members. And this is all thanks to the greater uniformity that we’ve seen in state agency licensing laws.

ANDY MOYER: So, Bill, is NAIFA doing anything to help the states?

BILL ANDERSON: Absolutely. Um, it is a number one priority for NAIFA to support uniformity in agent licensing throughout the country. We work very closely with the NAIC on the various projects that they have embarked upon. We have a seat on the NIPR board. And state associations have been very helpful in supporting passage of the Producer Licensing Model Act throughout the country. The latest development by the NAIC is a broad-based coalition of industry and regulators to actually go out and assess and rate every one of the states to see whether they are in compliance with the requirements of Gramm-Leach-Bliley and the NARAB requirements under there and the reciprocity that is afforded throughout the country. And the idea is to identify those pockets, those problems, that are still out there that are impediments to uniformity and then address them state-by-state.

ANDY MOYER: Now, aside from causing licensing headaches, inconsistent regulations have often kept producers from bringing new products to market quickly. Michael, can you tell us what the states are doing about that?

MICHAEL GERBER: Sure, Andy. The insurance industry has long had a speed to market problem in getting new, innovative products to consumers. And the problem has always been this: a company that wants to introduce a new product has to file it separately in every state which they want to offer it. And every state has different rules and different forms and different review procedures. And this, obviously, is a very costly and time consuming enterprise for insurers. And that can add months or even years to the time it takes to get a new product to reach the market.

This inefficient process that the states currently have puts the insurance industry at a serious competitive disadvantage compared to the banking and securities industry, which can often introduce products nationwide after approval from only a single regulator. So the NAIC developed the Interstate Compact to solve this problem. The compact is an agreement among states to create a single point of filing to new insurance products. And it covers life insurance, annuities, disability income and long term care insurance. All the states that adopt the compact law agree to a uniform set of standards for product review and approval. And once a company’s filing is approved by the compact commission, the company can sell that product in any compacting state.

ANDY MOYER: And what’s NAIFA’s position on the Interstate Compact?

BILL ANDERSON: NAIFA has from the very beginning supported the Interstate Compact. We were heavily involved in the development of the compact with the NAIC. Our state associations have been very helpful in promoting the enactment of the compact in the various states. And NAIFA and AHIA each have a seat on the industry advisory committee to the compact. So we are constantly involved as the compact is evolving.

ANDY MOYER: Have the states had success putting the compact into operation?

MICHAEL GERBER: They sure have. I mean, this is a real success story for state regulation. The compact has moved very fast. In fact, I think it’s the fastest adopted compact that we’ve had in our nation’s history. It was adopted by the NAIC in 2003. And by 2006, it already had been adopted by 26 different states and began to set up its operation. The compact now has 30 member states. And that represents about 50 percent of the premium volume for the covered products. And it has already begun approving products for several companies with a turnaround time of less than sixty days.

What NAIFA would like to see is that the compact is adopted in every state. And we’re happy to see that compact legislation is currently pending in several states. Unfortunately, it’s really hard to tell if all states will ever agree to join the compact, including some of the country’s largest states with the biggest markets, and how long nationwide approval will really take. And another challenge for the compact is having the companies themselves file with the compact commission now that it’s open for business. And unless more companies step up and use the compact, it’s not very useful to have it. So we’re going to have to wait and see if company usage increases over the next year or so.

ANDY MOYER: And Bill, what is your impression of the state of the states as they try to improve regulation of the industry?

BILL ANDERSON: Well, we’re never going to avoid the difficult of achieving uniformity with over fifty different jurisdictions. However, we continue to try. I think it’s extremely helpful that the states are now motivated through the NAIC to improve the state system in order to avoid potential federal regulation. And NAIFA will continue to support these state efforts to improve state regulation, to help NAIFA members and the clients that they serve.

ANDY MOYER: Finally, why should NAIFA members care about these issues? And how can they help? Bill, you want to answer this?

BILL ANDERSON: Well, certainly an improved system of state regulation that is more uniform will assist agents in ease of insurance agent licensing. The speed to market efforts will allow them to have more products to sell to their clients and remain more competitive with the other financial services industries. And they can help by supporting our efforts in the states when we need help enacting legislation and regulation and responding to action alerts when we call for action that is necessary to implement a lot of these efforts.

ANDY MOYER: Bill, Michael, thank you very much for joining us today on our GovPod.

MICHAEL GERBER: Thank you, Andy.

BILL ANDERSON: Thank you.

ANDY MOYER: For more information on this and other GovPods, please visit the NAIFA website at www.naifa.org\advocacy. Membership in NAIFA is all about your success. We give you the tools you need to grow your business and propel your career as an insurance or financial adviser. Learn more about becoming a NAIFA member and join today at www.naifa.org\join. This 2008 podcast is a copyrighted production of the National Association of Insurance and Financial Advisers. All rights are reserved.

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Optional Federal Charter: January 1, 2008

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A proposed Optional Federal Charter (OFC) would give insurance agents and companies the choice of either being regulated by the federal government or remaining under the current state system. While an OFC could simplify business for agents doing business in multiple states, it would also create a potentially burdensome federal regulator.

NAIFA Trustee Russ Smith, CLU, ChFC, CFP, CSA, and Director of Federal Relations Jill Edwards discuss the pros and cons of this controversial initiative and explain how an OFC could affect your bottom line. _____________________________________________________

AM = ANDY MOYER; JE = JILL EDWARDS; RS = RUSS SMITH

AM: Welcome to NAIFA’s GovPod, the podcast about important legislative issues affecting the insurance and financial services industry.  I’m Andy Moyer, communications producer for NAIFA, and today I’m joined by Jill Edwards, director of federal government relations at NAIFA, and Russ Smith, a member of the NAIFA Board of Trustees.  We’ll be discussing the Optional Federal Charter or OFC.  Simply put, the OFC is a legislative initiative that would allow life and property casualty insurers and agents to choose to be regulated by a single federal entity or remain under the state system.

This is perhaps the most controversial issue facing the insurance industry and, as NAIFA members, it is important for you to better understand the impact an OFC could have on your bottom line.  Jill, Russ, thanks for being here today on our podcast.

JE: Thank you for having us.

RS: Thanks, Andy.

AM: Jill, can you start by giving us some details about the OFC and specifically how it’s become such an important issue?

JE: Happy to.  Thank you, Andy.  Basically, the Optional Federal Charter is just what you stated.  It is a legislative initiative that would allow property casualty agents and life agents and companies to choose whether or not they would remain as state regulated or move to a single federal system.  It’s a very controversial issue, as you said, because, obviously, the insurance industry has been regulated by the states forever, about 135 years, and it was reaffirmed in 1945 with the McCarran-Ferguson Act.

But since passage of the Gramm-Leach-Blily Financial Services Modernization Act in 1999, many would argue that the insurance industry was not modernized and we’re still operating by an antiquated system where you have to have 50 different state regulators and 50 different insurance commissioners all have to agree to get anything done.  And it’s really slowed the progress of our industry and everyone agrees, including the insurance commissioners and legislators, that something needs to be done. 

And the Optional Federal Charter is one of those options, but it is controversial.

AM: So, Russ, where does NAIFA stand on the creation of an OFC?

RS: Well, NAIFA has forever, as Jill indicated, supported the state regulation of the insurance industry, but there are significant deficiencies and, therefore, NAIFA is open to considering any and all regulatory options that will ease those deficiencies, most notably the speed-to-market issue and the licensing issue.

AM: Okay, but many NAIFA members who are licensed for securities tell horror stories about dealing with the Securities and Exchange Commission and FINRA.  Why should we expect federal regulation to be any different under an OFC?

JE: Well, first of all, many people who are listening might be wondering what is FINRA?  FINRA is a new entity that came about in July of this year when the now former NASD and the New York Stock Exchange merged.  As far as the comments that we have heard from NAIFA members in dealing with the NASD and now FINRA, there is a legitimate argument that part of the problem is that FINRA and the SEC, they don’t understand the unique relationship between insurance and securities. 

And FINRA, really, is looking at things from just the securities side because there is no federal entity for insurance.  One of the opportunities under the Optional Federal Charter…  And I say opportunity because those who are securities licensed, they will continue to be regulated by the SEC and FINRA.  But under the Optional Federal Charter there is an opportunity to get the FINRA piece out of it and to create a new self-regulatory organization that recognizes the unique relationship between these insurance/ securities products, these hybrid products.

And I know a lot of our members who sell those products have seen a lot of the bad press.  Well, perhaps a lot of the bad press has come about because of poor regulation.  And this is an opportunity to perhaps correct those regulatory problems. 

AM: Russ, are there other potential benefits for agents or would an OFC really be most beneficial to companies?

RS: Andy, I think the benefits are across the board.  Yes, the company certain benefit, but the big benefits to agencies and entrepreneurs that run small agencies is the licensing issue.  Right now if you do business in multiple states, you have to apply for a license in those states.  Each state might have its own continuing education requirement, etc., and it just becomes very tedious.  I personally am licensed in about 25 states and having to go through all of the issues involved with that, it’s crazy.

If we had just one license that would allow us to do business in all 50 states, that would just be so much better.  Now the negative side to that is what’s the cost gonna be?  It could be large but I think it would still be less than what the cost is of paying 25 different states.  Additionally, the speed-to-market issue products…  Right now products get bogged down in the approval process in many states, California, notably.  It takes forever to get a product to market. 

And that affects not only me but it affects my clients as well.  If there’s a good product out there that’s available in Arizona but it’s not available in California, that puts me at an extreme disadvantage.  If there were a single clearinghouse for product and once approved it was available for sale in all states, I think that benefits—yes, it benefits the companies but it definitely benefits the agents.

JE: And if I could just add to what Russ said, you know, we’ve said that this was about the property casualty and the life side of the business on both the company and the agent side, and not health.  Healthcare has largely been out of this debate.  If you were an agent and you’re multiline, you can choose to be a nationally licensed agent, but if you’re selling for a company, including health insurance, you can sell all over the country. And just depending on which company you’re selling for, you can sell in whatever states that they’re licensed to do business in.

AM: Okay, so how would an OFC affect consumers?  Jill, you wanna pick that up?

JE: Sure.  Basically, there are some potential downsides for the consumers.  One of the big issues, I think, in the insurance industry is the claims, especially on the property casualty side.  And I’m sure many of our members who are multi-line have dealt with that.  And so having that relationship with your state regulator, obviously, might be more beneficial than having to deal with some regulator in Washington.  And one of the proposals out there calls for consumer—there’s like six consumer call centers throughout the country just sort of address that issue.

And how well that would work, really, would remain to be seen.  That’s one of the potential problems of the proposal.  Now on the flip side of that, there also has been a lot of testimony before Congress that the current system has not been efficient to consumers because it offers them less product choice.  I mean, some products that are available in California but not necessarily available in Nevada, a neighboring state.  And it really does sort of limit consumer product choice when you don’t have that speed-to-market that the Optional Federal Charter really would create.

It’s been determined that there are billions of dollars in compliance costs that the companies and agents are having to incur because when you have 50 different regulators, actually, it’s 50 plus when you consider the District of Columbia and the territories…  And so what this would do is—potentially is to reduce those regulatory costs for the companies that choose to go to a federal regulator, or the agents that choose to go to a federal regulator.  And, ultimately, those costs will perceivably be passed down to the consumer.

AM: So what are the prospects of an OFC being enacted?

JE: NAIFA, first of all, has worked incredibly closely with the states, specifically with the National Conference of Insurance Legislators, with the National Association of Insurance Commissioners in trying to address this issue, and we will continue to do so.   But the reality is (and regulators are usually—you know, they usually agree with this), to get it—totally uniformity is a very tall order because you have to get 50 insurance commissioners and 50 state regulators with all those bodies to agree on one thing at a time. 

It’s a very slow process.  And when you look at the state’s track record, it isn’t very good but there have been significant improvements.  For instance, the Interstate Compact, it did not really take off until there was a threat of an Optional Federal Charter.  So the simple threat of federal intervention is causing the states to act, and so that is the benefit of this discussion. 

Now in Congress there have been proposals offered in both the House and the Senate.  They’re similar.  They’re called the “National Insurance Act” that would—is, basically, the Optional Federal Charter Bills.  And they—there have been hearings in the House.  Actually, there’s been two.  As of late we’ve been reporting on those in Frontline and in Advocacy updates.  The Senate has been a little slower but there is—they have intentions to hold hearings this Congress.  But there's sort of momentum building. 

And one of the really interesting developments is this year Senator Charles Schumer of New York and Mayor Bloomberg of New York issued what’s called the Schumer-Bloomberg Report on capital markets and financial institutions in the United States, obviously, New York being the country’s financial center.  And one of the things that came out of that report is that the current insurance regulatory structure being broken and being deficient and being slow to respond to the modern marketplace has really hurting the financial markets.

And they now—and that report said that the Optional Federal Charter is potentially necessary.  The U.S. Department of Treasury has now recently received comments on this very issue.  NAIFA provided our comments and they’re available on our website.  So the bottom line is that this is a lot bigger than just insurance agents and just insurance companies; this is about the economy.  So there are a lot of factors in play here and so, obviously, NAIFA’s gonna be representing the agent interest and the life insurance agent interest in particular as this moved forward.

But those listening need to recognize that this is a big monster.  It’s not gonna happen overnight, it’s probably not gonna happen this Congress, but the momentum is definitely growing.

AM: Okay, Russ, while you’re out in the field and in a number of states, why is this issue important to NAIFA members?

RS: I think Jill hit many of the high points but, you know, the reality is that reform is inevitable.  There is no two ways about it.  Whether it takes the form of the Optional Federal Charter or whether we enhance the Interstate Compact it’s inevitable.  The two big pluses, as I see it, are the speed-to-market issue regarding product and the licensing issue.  I would like to just have one license in order to do business in multiple states. 

And the fact that the Optional Federal Charter is, indeed, optional shouldn’t be worrisome to somebody who’s just doing business in one state because they can opt in or opt out either way.  But we need to be in the discussion as to what form this reform is going to take.  The negative that I see, quite frankly, is the federal regulator.  That’s been problematic.  If you’ve got a good state insurance commissioner and you wanna continue to work with him, you know, why would you opt for the federal regulator? 

But the reality is reform is inevitable.  We are going to have to embrace something.  I think two out of three of the issues are good with the Optional Federal Charter but it’s very early in the process.  We’re not sure exactly what it’s gonna look like when it’s all done, but we need a place at the bargaining table, if you will.  So stay tuned.  This is very, very important.

AM: Excellent.  Finally, how can NAIFA members learn more about the OFC and keep current on legislative developments?  Russ, you wanna take this?

RS: Yes.  Thanks, Andy.  Several areas.  One, we have a Program-in-a-Box, number 21, that is available on the Leaders’ Training Center.  Additionally, there’s an insurance regulatory reform section on the NAIFA website and the NAIFA website is www.naifa.org.  And then also the new gov e-mail communications that’s being launched in January 2008 will keep everybody informed on a regular basis. 

AM: Thank you, Russ.  Jill, Russ, thank you for being here on our podcast today.

JE: And thank you for having me.

RS: Thanks, Andy.

AM: For more information on this and other govpods, please visit the NAIFA website at www.naifa.org/advocacy. 

Membership in NAIFA is all about your success.  We give you the tools you need to grow your business and propel your career as an insurance or financial advisor.  Learn more about becoming a NAIFA member and join today at www.naifa.org/join.  This 2008 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors.  All rights are reserved. 

Professional Designations

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HOST: Welcome to the NAIFA Advocacy Podcast, the broadcast about important legislative issues affecting insurance and financial services industry.  I’m Magenta Ishak, Director of Political Affairs for NAIFA.  As you may know, several recent newspaper and TV news reports have alleged that some insurance and financial advisors are using misleading professional designations to gain access to elderly Americans and encourage them to purchase unsuitable financial products.

The allegations are potentially damaging to NAIFA members because they could easily compromise the public’s trust in insurance agents, especially those who sell annuities to retirees.  Today we’re speaking with Gary Sanders, Senior Counsel for NAIFA, and Jill Edwards, Director of Federal Government Relations at NAIFA.  Jill, can you start by giving us some background on the issue?

JILL EDWRDS: Happy to.  Thank you, Magenta.  Basically, some of you who are listening may or may not be aware that there have been some recent major media allegations that, specifically using the term “insurance and financial advisors”, that’s the term they’ve used, are basically duping senior citizens into purchasing unsuitable products which are usually annuities.  These stories have been run front page New York Times on a Sunday, which gets a lot of readership as many of you know, there have been front page Washington Post and it’s gotten a lot of attention. 

The State Securities Regulators and the Securities and Exchange Commission have been extremely active on this issue and the Senate Aging Committee has taken notice and held a very popular hearing on September the 5th of this year.  I can tell you in all the years that I’ve been lobbying Washington and lobbying the Aging Committee, I have never seen a more crowded hearing.  This is something that has gained substantial attention by legislators, regulators and the press.  And with that response, NAIFA is not doing a service to its members. 

HOST: So, Gary, what has been NAIFA’s response?

GARY SANDERS: NAIFA’s been on top of this issue from the start.  NAIFA’s Policy Formation Subcommittee, which is our subgroup of the Government Relations Committee that initially considers and determines the policy on issues, held two meetings on this and just about two weeks ago NAIFA’s board considered this issue and adopted a motion on it.  Basically, where we came down is that we support the enactment of legislation, which would have the states adopt legislation that creates a structure, and a system for determining what designations and what certifications would be entitled to what we call a “safe harbor”.

That would basically mean that any designations on that list, somebody (inaud.) them, would be protected against claims brought against that person based upon the misleading use of the designation.  In order to achieve uniformity in what the states do, we also support having the NAIC, which is the National Association of Insurance Commissioners, and the State Securities Regulators who are called the North American Securities Administrators Association work together to develop a model legislation for the adoption by the states.

And in order to encourage the states to take action on this, the NAIFA position also encourages the Congress to enact legislation basically providing that if the states don’t act by a certain date or some reasonable time in the future, then either the Treasury Departments, another federal agency or a federal self-regulatory organization would be directed by the Congress to develop a list of designations and certifications that would be entitled to this safe harbor.

HOST: Why doesn’t NAIFA develop a list of endorsed candidates?

GARY SANDERS: NAIFA could take the easy route, I guess, and develop its own list of what’s good and what’s bad, what people can use, what they can’t use.  Such a list, of course, wouldn’t be binding on anybody because NAIFA’s not a governmental entity or organization.  But there are a couple problems with this.  The first is possible anti-trust problems for NAIFA, second is possible First Amendment problems under the U.S. Constitution which guarantees the right to free speech. 

Beyond that NAIFA believes we need a real coordinated effort to really address this.  That’s why over the past couple weeks we’ve been meeting with our industry colleagues at AALU (ph.), EACLI (ph.), the American College and with various state and federal regulatory—regulators and legislators such as the NAIC, the State Securities Administrators and the staff of several Senators on the Senate Aging Committee.

HOST: Jill, isn’t the issue really whether a particular sale is suitable regardless of the seller’s designations?

JILL EDWRDS: Well, we certainly think so.  I mean, ultimately, it doesn’t matter what your designation is because the designation doesn’t make the agent.  What makes the agent is whether or not it is—is the level of service that they’re giving to their client and whether or not they sell them a suitable product.  But, unfortunately, we’re in a situation right now where the media and the Congress are deciding what the issue is. 

And all they—although they agree that suitability’s obviously a key component of it, they believe that the designations are basically creating a—an open door and sort of, I guess, reeling seniors in, you know, because of these designations that sound good and sound like they have a level of expertise that may or may not actually exist.  And so basically our regulators and legislators are trying to crack down on that component and we are simply being responsive to that side of it.  But suitability, obviously, is a major issue and NAIFA’s been doing a lot of work on that.

HOST: What exactly is NAIFA doing about suitability, Gary?

GARY SANDERS: Plain and simple, NAIFA supports suitability in the sale of all annuity products.  And, as Jill stated earlier, most of the problems in this area involve either deferred annuities, index (ph.) annuities or some type of annuity product.  Beyond our flat out support for suitability and the sale of annuities, NAIFA also supports the adoption of two NEI—NEIC models, the suitability and annuities transactions model regulation and the disclosure and annuities transaction model regulation, which are designed to make annuities transaction more transparent and help ensure that the sales to the people, and not just seniors, to all consumers, under the model regulation are suitable.

Currently somewhere in the neighborhood of around 35 states have adopted each of these NEIC models.  In the next couple of months NAIFA is going to be making a big push along with the ACLI (ph.) to encourage our state associations to encourage their legislators and regulators to adopt these models in the upcoming session.

HOST: So, Jill, what are the prospects for the NAIFA proposal?

JILL EDWRDS: Well, we’re in the early stages.  I mean, you have to think of a few things.  I’m sure many people listening to this podcast right now are thinking, well, why don’t we just go to the National Association of Insurance Commissioners and get them to adopt something.  The problem is that the NAIC’s work has all been done on the suitability side of the equation and very little has been done on this allegations of being—of misuse of designations.

The folks who are doing all the talking right now are with the Securities and Exchange Commission.  Christopher Cox, who’s the Chairman, has been doing all of the talking and they held a senior—Second Annual Senior Summit recently that NAIFA attended.  The State Securities Regulators, the state AGs in Minnesota and in Massachusetts have all been very, very active on this.  The insurance commissioners have been fairly (ph.) quiet.  So what NAIFA’s been doing, and Gary mentioned this earlier, we’ve been meeting with the State Securities Administrators, we’ve been meeting with the NAIC, we’ve been meeting with our company counterparts at the American Council of Life Insurers. 

And what we’re trying to do right now in these early—in this early stage of this process is to get all the players on board, because what we ultimately don’t want to happen is for, for instance, an NAIC model act (ph.) to be adopted in all 50 states and then the State Securities Regulators not even recognize it.  We want everyone involved to recognize what list of designations has a safe harbor and which designations do not.  And that way we eliminate a lot of the confusion that is going on right now and you get all the relevant regulators and legislators on board to where this issue does not continue to haunt us in the press. 

HOST: Why should NAIFA members care about all this?  How exactly could it affect their business?

JILL EDWRDS: Well, I think it’s pretty simple.  If the press is saying that insurance and financial advisors are duping seniors, it doesn’t matter how many—you know, how many folks are actually engaged in this alleged practice.  It affects everyone because a bad reputation spreads very quickly and ultimately it’ll result in probably fewer sales and—and—and a complete mistrust in the public in our profession.

HOST: So, Gary, now that we know more about the issue and the impact it could have on the industry, what can NAIFA members do?

GARY SANDERS: I think there are several things that a NAIFA member can do on this matter.  First, I think when they meet with their clients; they can discuss what their designations actually mean.  They can talk about the course of study they had to go through, the type of test they took, answer any questions your client may have.  Second, always focus on suitability.  As Jill said, I think the real issue here really is suitability.  The bottom line is if a product’s sold to somebody as suitable, I doubt you’re going to hear many complaints about the designation used by the person selling the product.

So always go over with a fine-toothed comb the financial condition of your client, all the other normal indications you use to determine whether a product is suitable or not.  If you’re asked by a legislator in your state, or a regulator, what—what—you know, what you’re doing about this issue, what your association is doing, tell them that NAIFA is working hard on this issue and is working on many different fronts on this.  If you need to, refer them, of course, to either myself, Gary Sanders, or to Jill Edwards at the NAIFA Law and Government Relations Department for any further information they may need.

HOST: Thanks, Gary.  Thanks, Jill.

JILL EDWRDS: Happy to be here.  Thank you.

GARY SANDERS: Thanks Magenta.  Always a pleasure.

HOST: NAIFA and AHIA encourage you to learn more about SCHIP and how it will affect your business. For more information on SCHIP log onto AHIA's website at www.ahia.net and look in the Take Notes section.

[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]

Closing Music Plays.

How Expanding SCHIP Could Affect the Health Insurance Industry

Opening Music Plays

HOST: Hi and welcome to the NAIFA advocacy pod cast. I'm Andy Moyer, communication producer for NAIFA. The State Children's Health Insurance Program, or SCHIP, provides federal funds to states on a matching basis to help fund health insurance coverage for uninsured children living in low-income households. SCHIP was set to expire on September 30th of 2007 unless re-authorized by Congress. Today AHIA executive vice president, Diane Boyle joins us to discuss the importance of SCHIP and what it means to NAIFA and AHIA members. Hi Diane, and welcome.

DIANE BOYLE: Thanks Andy.

HOST: First can you address this September 30, 2007 expiration date. Now that the deadline has come and gone has SCHIP expired?

DIANE BOYLE: Yes, Andy, the September 30th expiration date has come and gone. However, Congress has passed a continuing resolution that will allow for SCHIP to continue even though that date has expired. The new expiration date is now November 16th. So if Congress does nothing from now until the 15th the children will still be covered. The new deadline obviously is the 15th and if they don't act by then then SCHIP will indeed expire.

HOST: So why did the President veto the compromise bill?

DIANE BOYLE: Well, as you mentioned there was a compromise bill. The House and the Senate both looked at this issue very closely and the idea of providing coverage to children is a bipartisan effort; it's supported on both sides of the Hill, both in the House and the Senate. And the two bills that were originally passed were very different. There was a compromise bill and the President still felt that that compromise was above what he wanted to spend.

It is funded with a tobacco tax which is something he's also opposed to doing and overall he feels that the compromise bill will still pull children that are above that low income level and pull them off of private insurance. He feels that this is a step towards the government program rather than an incentive for low income individuals to purchase health care coverage.

HOST: Along those same lines I read in some recent articles that some children who are eligible for this program haven't used the funds. So why are they thinking about expanding this if the funds aren't being utilized to their fullest extent?

DIANE BOYLE: That's a good point Andy. One of the concerns at AHIA and NAIFA have with SCHIP in general is that there are a number of children that are eligible for the program now that are not currently enrolled and if we look to expand it we'd rather see efforts focused on getting those eligible for the new program enrolled first before you look at raising the income levels for those children. Also some of the states have used some of the funds for adults rather than just children.

And again it should be, in the association's opinion, focused on those low income children that the program was set up for children not necessarily for adults. And this is true with the President's veto as well, it's not that he was voting for vetoing the program, he's looking at expanding it as well, but he's looking at expanding it to the tune of $11 billion opposed to the $35 billion that was in the compromise bill.

HOST: So how does SCHIP affect NAIFA and AHIA members?

DIANE BOYLE: Well, it's a very good question. As you know the Congress is operating under what's called a PAGO (ph.) rule and for any new incentive or expanded that has to be paid for. So if you're going to expand the SCHIP program beyond where it is now, the Congress has to come up with dollars to fund it. And they can do so in a number of ways. They can either increase taxes, which is what was included in the compromise bill; they were using tobacco tax to fund the legislative. The originally House version had two funding provisions that were very much of concern to our members.

One would have put a $2 per person tax on each health insurance plan. Obviously the cost of insurance is one of the issues that we feel is keeping folks uninsured. We need to address the affordability issue in order to get more people covered and if you're taxing them at a greater rate then that's not going to do anything to address the affordability issue. The other funding mechanism was a provision that would decrease funding to Medicare Advantage plans. And that's obviously something that's of interest to many of our members and not something that we were in favor of.

So as this program evolved why it's extremely important to the NAIFA and AHIA members is that funding mechanism may come back and hurt the industry sales in general. The other issue to look at is if the SCHIP program were expanded well beyond the low income children what you're going to find is that those children that have private insurance now will drop that private insurance and become part of the SCHIP program.

HOST: And are there opportunities for NAIFA and AHIA members in the re-authorization?

DIANE BOYLE: There are. One of the things, you know we talked about PAGO and that you have to find the money for this and if I were a member of Congress and I'm looking to find the funds, you can look at creating new taxes, which is often not welcome with open arms by the constituents or you can look at programs that currently are tax advantaged. And there are a number of our programs that are tax advantaged now.

If you look at just the health insurance, employer provided health care and long term insurance receive $628.5 billion, cafeteria plans is $185.5 billion. So there's significant dollars in our products that are attractive. It posed to raising taxes if you can come to one of these programs and take some of those funding dollars away to pay for a new program, such as SCHIP, that's attractive. And the opportunity for our members is to go back to their members of Congress and explain why these tax advantages exist for life insurance, why the tax advantages exist for employer provided health care and long term insurance.

What are the benefits and re-establish that understanding of our products and why they intended, the tax incentive is needed and should stay in place.

HOST: So Diane now that the House failed to override the President's veto and a new compromise bill has been presented in the House what can we expect to happen with SCHIP?

DIANE BOYLE: Well, you're right Andy on the 25th of October the House of Representatives passed yet another slightly modified version of the compromise bill. It is still $15 billion more than what the President has said that he would like or would be willing to accept. The Senate is expected to vote on the legislation sometime this week. What we'll see is that the President will once again veto the legislation.

The House was short the 290 votes needed to override the veto, but my expectation is that they will go through the process, they will attempt to override the veto and will end up passing a continuing resolution in order to continue the program into 2008. As we said earlier the continuing resolution that's in place now expires on November 16th. In addition to covering the children there are a number of issues that are in play.

You're looking at the political side of things. Why one would ask would the House attempt to override the President's veto if they're short the 290 votes needed to do so? And a lot of that is maneuvering for the elections. We're going to see the Democrats say the Republicans stood in the way, stood behind the President on blocking coverage for children. Some of the Republicans are saying no, that's going to help them in the election because their constituents are going to say no, you were pushing for a more modest SCHIP proposal.

One of the bigger concerns for our members is that when they begin renegotiating, after the continuing resolution expires and they look at this again in 2008, some of those provisions that we talked about earlier, the funding provisions, the $2 tax on each health plan per person could come back into play. The cuts to the Medicare Advantage program could come back into play. So what we're doing on this end is monitoring it very closely to see that once this becomes a live issue again that the advantages that our products now have aren't compromised and that there are no new taxes that are being looked at in order to pay for any new effort that's put forth.

HOST: Now, is there a chance that there could be a change in the level of percentage above poverty level that some children will be eligible or not eligible after this alteration or is that?

DIANE BOYLE: Not with the continuing resolution. What the continuing resolution does is it takes what's in place now, what was originally set to expire September 30th and goes from those provisions, those definitions of what are followed. So any expansion to the program will not happen until the House and the Senate both pass it and the President signs it. So right now we're just looking at a continuation of the program as it was originally set up.

HOST: Diane thank you very much for being on our pod cast here today.

DIANE BOYLE: Thanks Andy, I appreciate the opportunity to share our thoughts.

HOST: NAIFA and AHIA encourage you to learn more about SCHIP and how it will affect your business. For more information on SCHIP log onto AHIA's website at www.ahia.net and look in the Take Notes section.

[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]

Closing Music Plays.

NAIFA Marks Another Successful Day on the Hill

Opening Music Plays

HOST: Welcome to the NAIFA Advocacy Podcast.  I’m Andy Moyer, Communications Producer for NAIFA and I’m speaking to you from the Senate Office Buildings on Capitol Hill in Washington, D.C.

MINDY REYEZ: Hi.  I’m Mindy Reyes with NAIFA Scottsdale, Local President.  I work for Country Insurance and Financial Services as an agent.  This is my first time at the convention and just having a great time.

HOST: Mindy is one of over 1200 members of NAIFA here on the Hill today who are meeting with their congressmen to advocate for the insurance and financial industries on behalf of all NAIFA members. 

MINDY REYEZ: This has been a blast.  We had the opportunity to meet with John Kyles' staff.  She was very informative and kind and answered all our questions and spent as much time as we wanted.  Our next appointment was to be with Senator McCain.  He wasn’t available but as we were walking in the hall we happened to see him and got the opportunity to chat with him as we told him we were constituents of Arizona.  So he took time to stop and shake our hands and listen to what we had to say and we were able to drop off our packets to his office.  So it’s been fun.

HOST: Because the NAIFA convention was held in Washington, D.C. this year, members who attended the meeting were prepped by NAIFA staff and afforded the opportunity to meet with their congressmen. Along with Mindy we spoke with other NAIFA members who participated in this historic day on the Hill experience. Let’s listen to what a few of the other NAIFA members had to say about their meetings throughout the day.

SCOTT SURNETT: My name is Scott Surnett.  I’m with NAIFA Cedar Valley in Iowa and I’m a financial advisor.  I am a member of YAT.  In fact, I’m privileged to serve as the YAT National Chair this year as the incoming Chair.  And so far the convention has been fantastic and I’ve met with three offices now, two senators and a House of Representative member.  And we’ve had great meetings and it’s really a unique opportunity to have a chance to meet with our members of congress. 

And I would just encourage people who have not had a chance to do that to do it.  It’s really a neat opportunity and something I think everyone should at least be able to do once in their lifetime.  NAIFA staff was fantastic in making sure we understood what the issues are, what the areas that we want to advocate are and they trained us well with respect to speakers in the morning sessions as well as print materials. So we felt we had a concise agenda to go in with and I think they heard our messages.

I think the best message I can take back and share with folks in my local or in the state is that if we’re not advocating for our beliefs, by default someone else is advocating against us.  And that’s why I think it’s really important that we stand up for the things that we want to fight for our clients for and it’s really important to do so.  If we don’t, again, we’re going to be advocated against and we certainly don’t want that.

BARRY JOHNSON:  I am Barry Johnson and I am from Wellman, Iowa, and I’m a Past President of the Iowa City Association and I’m a Financial Advisor Registered Representative with Inner Securities.  We talked about the four basic issues – the Pay-Go tax incentives, the 12B1 Fees, the repeal of the McCarran–Ferguson Act and Life Insurance Awareness Month.  So it went very well.  You see the senators on television, you hear them on the radio, but there’s nothing like being here in person.  It’s an experience you’ll never forget.

NICK STOSIK: I’m Nick Stosik from Reno, Nevada, in the northern Nevada chapter, and I am a Multi-Line Agent but also I am a CFP so I also focus on financial services and financial planning.  I’ve been the State PAC Chairman for many years, the State PIC Chairman for many years, and so I’ve always been very involved in the issues of insurance and how they impact the legislation and those sort of things.  We got to meet with four members of the Senator staff and the meeting went well. 

We had a lot of people in there and a lot of ideas and a lot of discussions.  Senator Reid, being the Majority Leader of the United States Senate, obviously it was important for us to be able to get NAIFA’s positions to as many people in his staff as possible.  So I think we were successful in doing that.  But the NAIFA website is absolutely invaluable in telling you what are the major issues that our association is facing, not only in national issues but as well as state issues. 

They even have different issues that states are going to be voting on or looking at.  And so if you go to the website, you’ve got a wealth of information to find out what those issues are, what NAIFA’s positions are, the history, the background.  And really, if you have those summarizations, it’s all you need to be prepared.

HOST: One of the advantages for the people who participated in this event was that they received firsthand instruction from NAIFA’s legislative staff prior to their meetings.  Nick makes a valid point in that even if you didn’t attend the convention or have the opportunity to prepare with NAIFA staff on site, you can always access NAIFA’s website for up-to-date information on important legislative issues.  This will help your grass roots efforts, a very important element for an advocacy program to be successful.

TERRY KULTIMBAH: Terry Kultimbah.  I’m with the San Diego Association.  I’m a Past Local and State President of NAIFA California.  I’m a Wealth Management Consultant with Phoenix Life and we have just finished a meeting with Ahmad Thomas, one of the legislative staff members of Senator Feinstein’s office.  I’ve been fortunate enough to be back here multiple times in the last five or six years and this is the third or fourth time I’ve met with Ahmad.  It’s critical that we build those kind of long-term relationships with members of congress cause it’s only through that grass roots effort that we really at crunch time are we able to deliver on our real issues.

And without that relationship we’re just another constituent out there.  So it’s absolutely critical that we build those grass roots relationships from day one.

HOST: For information on the NAIFA Advocacy Program or how you can get involved at the grass roots level go to www.naifa.org/advocacy.  We end this podcast with some observations from a NAIFA convention first-timer, our recently instated NAIFA CEO John Healy.

JOHN HEALY: I’ve done this for over 25 years and the meetings that we’ve had so far throughout the day I have been so impressed and so proud of the way that NAIFA members from across the country, in each and every one of the meetings that I’ve been in, the message that they bring to their congressmen and senators.  Every one of them have been interested in hearing that message. 

The points that they’ve made, the stories that they’ve brought to back up the points, whether it’s talking about the importance of the senator or congressman supporting LIAM, the Life Insurance Awareness Month, and the reason that they need to step forward to help to continue to encourage families to make investments in our industry’s products coming forward, the impact and the knowledge that our members bring to their jobs, it’s obvious that their passion for what we do just comes through as they talk.

Because many of the congressman and senators ask, you know, "Why do you do this for a living?  What is it that your industry really provides"?  Even though they may think they know about the insurance industry, they obviously don’t understand the important role that we play in American families’ financial security and freedom.

HOST: Thanks to the efforts of NAIFA members during the "Day on the Hill" campaign and the weeks that follow the NAIFA convention, the House and Senate officially declared September "Life Insurance Awareness Month".

Membership in NAIFA is all about your success.  We give you the tools you need to grow your business and propel your career as an insurance or financial advisor.  Learn more about becoming a NAIFA member and join today at www.naifa.org/join.

[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]

Closing Music Plays.

The Significance of Pay-Go and how it Affects NAIFA's Members

Opening Music Plays

HOST: Welcome to the NAIFA Advocacy Podcast, the broadcast about important legislative issues affecting the insurance industry.  I’m Andy Moyer, communications producer for NAIFA.  Lately we’ve been hearing more and more about something called “Pay-Go.”  To learn more about Pay-Go and how it affects NAIFA’s members we’re speaking with Michael Kerley, senior vice president of federal government relations at NAIFA.  Michael, thank you for joining us here today on our podcast.

MIKE KERLEY: Glad to be here, Andy.

HOST: First, Mike, can you tell us exactly what is Pay-Go?

MIKE KERLEY: Well Pay-Go is simply shorthand expression for “pay as you go.”  Every family practices pay as you go.  You bring in so much money; you pay out so much money.  And generally it’s not a good idea to exceed the amount of money that you bring in.  Well Congress operates somewhat on the same way and they have budget rules.  One of those budget rules is called pay as you go.  The Congress had allowed those rules to lapse a couple of years ago and unfortunately our budget deficits ballooned but when Congress reconvened this last January they restored the Pay-Go, or pay as you go budget rules, for this Congress. 

And I think the public can see if they’d been paying attention that in fact deficits have been going down.

HOST: Well that seems pretty straightforward but what role does this Pay-Go rule play in Congress’ operations?

MIKE KERLEY: Well I’ll tell you something.  It’s created a mad scramble for revenue offsets.  That’s really the biggest implications.  What that means is this.  If Congress wants to increase the funding for a particular program they have to find the revenue to do it.  Well there’s only two things you can do to get revenue to pay for that new program.  First, you can get it from some other program.  So you diminish a program.  Or you increase taxes, revenue in other words, to pay for that program. 

That has created a tremendous amount of pressure up in the Congress to find what they call “offsets” for new spending programs.  The Democrats that now control Congress do in fact have a different priority list than the Republicans who had controlled Congress for a number of years.  And each one of these initiatives is going to cost money.  And that’s where the pressure builds.

HOST: So now with this Pay-Go rule re-established what does this mean to our NAIFA members?

MIKE KERLEY: Uh, a big danger sign has gone up.  I mean, danger, danger, danger.  Um, most members of NAIFA don’t really focus on the fact that the products that they provide for their clients all come with really valuable tax incentives.  Life insurance inside buildup, life insurance death benefits, disability income nontaxable, health insurance benefits, retirement benefits in both annuities and qualified retirement plans.  All of these products and services that NAIFA members use to serve their clients have a tax component to it. 

That tax component adds up to about 1.5 trillion dollars.  That’s trillion dollars (!) worth of what I call sales incentives for the public to buy these products.  And the danger here is that Congress will look at those sales incentives and decided they’d rather scale back the ones that apply to insurance products and services and give them to something else.

HOST: So essentially stripping out all the sales incentives from the product?

MIKE KERLEY: That could happen.  And that’s where the danger is.  Senator, uh, Chairman Long used to sit at the head of the Senate Finance Committee every time it convened to look at ways to fund new government programs and he’d say, well the job here today folks is to carry out that old adage of don’t tax you, and don’t tax me, but tax the man behind the tree.  What we don’t want to be, ladies and gentlemen listening to this podcast, is the man behind the tree.

HOST: Can you give a present-day example of how the Pay-Go rule has impacted business of insurance agents and financial advisors?

MIKE KERLEY: Well, right off the bat when Congress came back in January one of the five items on the Democratic to-do list was to increase the minimum wage.  Sounds pretty simple, right?  Simply pass a law that increases the federal minimum wage.  But Pay-Go raises its ugly head, and so they say, oh, well, okay, we have to offset the cost of Pay-Go.  Where did they… what was the first thing they turned to?  They turned to scaling back the amount of income that people could put into deferred compensation plans. 

Now, the proposal that was put together was flawed from the get-go but the point is that’s the first place they went was to the deferred compensation aspect of our members business.  And so that should a produce a huge red flag over the NAIFA building to say we need to be on guard.  A second example is the state children’s health insurance program; a wonderful program to help disadvantaged children get health insurance.  And in fact NAIFA and its health insurance conference has actually supported that program. 

However, certain members of Congress want to expand the program to the point where it needs a considerable amount of additional income to pay for it.  And so they’ve looked around, the Congress has looked around for that revenue.  And first they found a lot of it in the tobacco, by increasing the tobacco tax, the increase on tobacco products.  Not a lot of sympathy there but they still needed a little more money so what did they do? 

They, at least the House, cut back on Medicare Advantage Programs that our members are selling to senior citizens.  And they’ve also added a $2.00 a person tax that employers must pay for each person for whom they have a health insurance plan.  Once again sets off all kinds of danger signals here and while those may not be the primary focus of NAIFA association members still it’s starting to get close to home.

 

HOST: Wow.  Well what about the future?  Are there threats to other products and services that our NAIFA members use to help clients achieve their financial goals?

 

MIKE KERLEY: Well as I said earlier a minute ago the products and services that our members provide amount to about 1.5 trillion dollars worth of non-taxed income and so what our fear obviously is that they will move from things like Medicare Advantaged which is important to a lot of our members but move to the mainstream which is life insurance, death benefits, inside buildup, disability income, long-term care insurance, and so on, annuities. And there are all kinds of ways at getting at those products. For example, with life insurance the Congress could decide to cap the amount of death benefit that an individual beneficiary would be allowed to have.  They could make loans under life insurance policies taxable instead of what they are now, not taxable.

HOST: Significant changes.

MIKE KERLEY: Significant changes to the products. You could also attack any insurance product offered by an insurance company, um, through something called a deferred acquisition tax which is a tax that’s actually applied at the corporate level but in fact is aimed at inside build-up of life insurance and annuities. There are all kinds of worry in the land or there should be at least.

HOST: Well what should NAIFA members be doing to make sure that Congress maintains the current tax benefits the industry products enjoy?

MIKE KERLEY: Just like any legislative threat members of the association must pay attention to what’s going on.  And the fact that members are listening to this podcast is evidence that our members are doing so.  So I congratulate them.  Second thing is they have to be willing to act.  For anybody who is skillful enough to download this podcast and listen to it you are skillful enough to respond to an action alert on the NAIFA website.

We have a legislative center on the NAIFA website and when we send out an action alert it directs you to go to that legislative action center and respond to that action alert.  These are just really simple, you know, if this were football it would be simple blocking and tackling.  I mean that is the, that is as simple as it gets in this business.  Third thing you could do is, members could do, is to talk to their legislators.  Explain the role of insurance products in transferring risks that individuals have.

The risk of dying too soon.  Living too long.  These are the risks that our industry takes on for the public.  At the same time it relieves the federal government and the state governments of the responsibility of doing so.  So I believe our members have a great story to tell legislators.  I think one other thing that we might want, members of our association might want to consider, and that is making certain that the middle class is well served. 

Statistics published by the life insurance marketing research association indicate that to some extent we are not serving the middle market.  Congress did not create these tax incentives to help rich people.  They created these tax incentives to help the middle class.  And if our industry is not serving the middle class then it once again opens us up to inspection.

HOST: Michael, thank you very much.  We really appreciate you being on our podcast today.  And I hope this explains a lot of this to everybody.

MIKE KERLEY: Glad to be here, Andy.  Thanks.

HOST: NAIFA encourages you to reach out to your legislators and discuss the limitations Pay-Go could have on the industry and your client’s financial future.  For more information on Pay-Go or how to contact your elected officials log on to NAIFA’s legislative action center at www.naifa.org/advocacy.

Membership in NAIFA is all about your success.  We give you the tools you need to grow your business and propel your career as an insurance or financial advisor.  Learn more about becoming a NAIFA member and join today at www.naifa.org/join.

[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]

Closing Music Plays.

The Importance of Life Insurance Awareness Month

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Opening Music Plays

HOST: Welcome to the NAIFA Advocacy podcast, the broadcast about important legislative issues affecting the insurance industry. I’m Andy Moyer, Communications Producer for NAIFA. As many of you know the Life and Health Insurance Foundation for Education or simply the LIFE Foundation, is a non-profit organization dedicated to addressing the public’s need for education about life, health, disability and long term care insurance. LIFE seeks to remind people of the important role agents perform in helping families, businesses and individuals find the insurance products that best fit their needs. Today we’re speaking with David Woods, CEO of NAIFA and President of LIFE.

For the past two years NAIFA has been involved with Life Insurance Awareness Month. Can you tell us what LIAM is and when it occurs?

DAVID WOODS: This is an exciting time. This is a time when NAIFA members can really improve their sales activity. With all the attention that will be paid to life insurance by the entire industry during the month of September their prospects and clients are gonna be ready to talk to them about life insurance during the month, and the collaboration between Life and NAIFA is what’s gonna make that possible.

HOST: Can you tell us a little bit more about how that’s gonna become possible?

DAVID WOODS: Yes I can. LIFE will be doing a number of things during the month. We’ll be doing heavy advertising in magazines across the country. We will be doing a lot of media works with newspapers, radio stations. TV stations will be picking up stories about life insurance and its importance. We’ll be supporting the sales activities of agents both directly and also through their insurance carriers. Over 100 insurance companies are actually participating in Life Insurance Awareness Month to help support their producers as well as educate their prospects and clients about the importance of life insurance.

All of this is coming together during the month and will be added to by, we hope and expect, proclamations from both houses of Congress, by the President of the United States, by fifty governors across the country, by the National Association of Insurance Commissioners. All of these folks, all of these bodies, are collaborating to make sure that the public understands the vital role that life insurance plays in their financial plans, and this opens a door wide for NAIFA members to really take advantage of it.

HOST: You mentioned that you’re gonna be doing advertising in newspapers and on television and also there’s a lot of campaigning on the radio about this, and you use your special spokesperson that you select for Life Insurance Awareness Month. Can you tell us a little bit about your spokesperson?

DAVID WOODS: You know one of the exciting things about Life Insurance Awareness Month is that for the fourth straight year we actually have a celebrity who will be out representing the industry to the public, talking about life insurance, talking about the important role that life insurance could have played in their lives had there been some. In this case our celebrity spokesperson is better known as Mary Katherine Gallagher but whose real name is Molly Shannon from Saturday Night Live. While she’s a wonderful comedienne she does not treat this subject humorously. This is very serious. She has her own real life story. She lost her mother and her sister at a very young age in a car accident, and had they had the life insurance her life would have been very, very much easier as would that of her family.

So it’s an important topic. She treats it beautifully, and we’re very, very excited to have her talking with the public about the importance of life insurance.

HOST: She’s also going to make an appearance at this year’s convention in Washington, D.C. in September, correct?

DAVID WOODS: Molly Shannon will be on the main stage at the NAIFA convention here in Washington, D.C. in December. Once again NAIFA’s been good enough to allow LIFE to have some time on the main platform to share with the attendees all of the things that they can do to take advantage of Life Insurance Awareness Month in their own professional lives.

HOST: Obviously there’s a very important reason for establishing Life Insurance Awareness Month. Are there a large percentage of people who don’t have insurance coverage?

DAVID WOODS: Unfortunately the tragedy is in this country that some 68 million Americans say that they need more life insurance either because they don’t have any or they don’t have enough. That’s a lot of people. That’s probably 40% or so of the adult population of this country. That’s a very, very big number. So our challenge and we feel, the industry’s obligation is to help the American people understand how essential life insurance is and how to get it. To talk to a NAIFA member who can help them with their life insurance needs. That’s our objective.

HOST: That sounds excellent. Really a great charge this whole month is going to have, and it’s obviously not going to stop with just September.

DAVID WOODS: Although Life Insurance Awareness Month is the month of September it really has a tale. I mean the momentum carries right through October, November, into December and it’s a terrific way for NAIFA members to really wind up their year in a strong fashion.

HOST: I wish you all luck with putting this whole thing together. It sounds like you’re well underway.

DAVID WOODS: I think we are and thank you.

HOST: And thank you for joining us on our podcast today.

DAVID WOODS: My pleasure.

HOST: NAIFA encourages you to reach out to your legislators and ask them to support this important national public awareness campaign in September. For more information on how to contact your elected officials log onto NAIFA's legislative action center at www.naifa.org/advocacy.

Membership in NAIFA is all about your success. We give you the tools you need to grow your business and propel your career as an insurance or financial advisor. Learn more about becoming a NAIFA member and join today at www-dot-naifa-dot-org-slash-join.

This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved

Closing Music Plays.

The Trouble With STOLI

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Length: 8.5 minutes

NAIFA and its colleagues at AALU and ACLI are concerned about the recent rise in popularity of stranger-originated life insurance transactions, known as STOLI. NAIFA's new Advocacy Podcast explains what STOLI is -- and isn't -- and why these transactions are bad for consumers and our industry.

In July's podcast, Gary Sanders, NAIFA senior counsel for law and government relations, provides an overview of this complex issue. In STOLI transactions, a promoter or sponsor encourages wealthy, elderly individuals to purchase life insurance policies on their lives, with everybody’s intent being that the insured will sell the policy to investors after the incontestability period expires. The promoter typically arranges for non-recourse premium financing to facilitate the purchase.

While these deals may seem like a win-win situation for everyone involved, Sanders explains some of the numerous causes for concern in the proliferation of STOLI programs.

Transcript

HOST: Welcome to the NAIFA Advocacy podcast, the broadcast about important legislative issues affecting NAIFA members.  I'm Andy Moyer, communications producer for NAIFA.  Joining me from our office in Washington is Magenta Ishak, director of political affairs, and Gary Sanders, senior counsel for law and government relations.  Magenta, would you like to go first?

MAGENTA ISHAK: Sure Andy, thanks.  Gary, I understand that over the last couple of years NAIFA's been asking state regulators to help stem transactions known as stranger originated life insurance, or STOLI, in order to protect traditional uses and purposes of life insurance.  I guess my first question is, what is STOLI?

GARY SANDERS: STOLI is basically a sort of a catchall phrase we've come up with to talk about situations where a speculator or a promoter who has no relationship with the insured, basically seeks out and encourages older people to initiate insurance coverage on their own lives.  And typically the promoter or speculator will arrange premium financing to help the insured cover the premium payments on the policy. The key thing here is that everybody's intention at the time the policy is purchased, is that the insured is going to transfer the policy to some third party investors at the end of the policy's two year and contestability period.

Basically the parties are agreeing at the time the policy's purchased, a life settle the policy two years down the road.

MAGENTA ISHAK: Well what's the difference between STOLI and other live settlements?

GARY SANDERS: The key thing I think is that with STOLI, everybody's intention at the time the policy is taken out, is that the policy will be settled two years down the road, in other words, the insured intends when they sign up the for policy, that they're going to sell the policy in a couple of years.  In the typical life settlement situation, somebody takes out a policy, a life insurance policy, for a legitimate insurance purpose, to protect against some type of unforeseen need because of whatever, their circumstances change significantly enough that, they find they no longer need their policy.

In that type of situation, a life settlement often times may make sense for the person.

MAGENTA ISHAK: So Gary, does NAIFA oppose all life settlements?

GARY SANDERS: No and I think that's a very important distinction and we really need to make that point very clear.  NAIFA opposes situations where a policy is taken out for the express purpose of life settling it two years down the road.  In a typical life settlement situation, somebody will take out an insurance policy for a legitimate purpose, to address a perceived need that may or may not arise down the road.  What happens then is that the policyholders and the policy owner's life circumstances change such that he or she determines that, in his own best interests and based on his own circumstances, he no longer needs that policy.

In that situation NAIFA does not oppose life settlements, again, as long as it's in the best interest of the consumer, based on that consumer's own circumstances.  STOLI is an entirely different situation because in STOLI, as I've mentioned, it is every… it's everybody intention from the outset, from the time the policy is taken out, that the policy will be life settled two years down the road.  Essentially you're turning an insurance policy into an investment or another commodity to be used as an investment.

MAGENTA ISHAK: But STOLI actually sounds like a good deal for everyone, what's the problem with it?

GARY SANDERS: There are several problems really.  First, life insurance is unique, it receives special protections under federal and state law because it's purpose is to protect the long-term interests that people with some connection to the insured, whether they be families, businesses, employees or charities.  State insurable interest laws actually were developed to make sure that life insurance policies were taken out only by individuals, families, or businesses with an interest in the continued life of the insured.  Now the problem with STOLI is that number one, it turns insurance into just another commodity, just another tool for investors to use, which is far from what the original purpose of the life insurance is.

Number two, it violates the purpose, even though it may not violate the letter, of sound insurable interest principles that are quite frankly older then America is.  Another problem with STOLI is that these types of transaction count use up an insured's future insurability.  As you know, people can't take out an unlimited amount of insurance on their life.  People take out STOLI policies and these policies are usually quite sizeable, into millions of dollars.  And the possibility exists that someone may not be able to take out future insurance when they actually have a real insurance need.

Another problem is that STOLI could result in unexpected tax liabilities for the insured, it could also lead to higher insurance premiums for all consumers, and finally, and this is the biggie I think, it could really threaten the current tax status of life insurance products.  When insurance is just another commodity, just another investor… investment, why shouldn't it be treated as just another investment?

MAGENTA ISHAK: Okay I understand the reasons we're concerned about STOLI, what is NAIFA doing to put an end to it?

GARY SANDERS: Ah Magenta we're sort of active in, I would say in all aspects of this issue basically.  First and foremost over the past, I would say 18 months, we've been working real closely with our colleagues at the American Council of Life Insurers and the Association for Advanced Life Underwriting, to help the NEIC draft amendments to its Biotical Settlements Model Act.  I'm happy to report that on June… on June 3rd, the NEIC amendments to the Biotical Settlements Model Act that will go a long way towards stopping STOLI. 

In addition, the National Conference of Insurance Legislators, a group of state legislators with a particular interest in insurance issues, is working on amendments on to their own life settlements model act.  We're also working closely with that group to help them craft appropriate amendments.  In addition to that, we are putting out, along with the ACLI, a document called STOLI alert which is essentially a newsletter on STOLI and issues surrounding STOLI which not only puts forth the latest developments, but also our position on these issues. 

That comes out once every couple of months, beyond that we are… also engaged in sort an ongoing public relations and media campaign that involves issuing newsletters… talking points and such, to help address what we feel are the problems of STOLI.

MAGENTA ISHAK: What about the state associations Gary, are they involved in this effort?

GARY SANDERS: NAIFA state associations play a key role in this effort from top to bottom.  At the NEIC the state associations wrote letters to their insurance commissioners urging them to support the amendments of the model act and then most states followed up with either a meeting or a phone call to their commissioner.

MAGENTA ISHAK: Can you give me an example?

GARY SANDERS: In addition to the letter-writing campaign at the NEIC, our individual states are active in this area as well.  North Dakota is a great example.  The North Dakota legislature considered these amendments even before the NEIC had finally adopted them.  Our folks were active in North Dakota on every level from grassroots activity, to testifying before the legislature and its committees, our members used their contacts with the North Dakota lawmakers to help these amendments go through in North Dakota and North Dakota has therefore been the first state to adopt these amendments.

MAGENTA ISHAK: Thanks Gary, good example of a state association taking action.  So what can the individual NAIFA member do? 

GARY SANDERS: Perhaps the most important thing the individual member can do is number one, stay abreast of the issues; understand the issues, read what we put out on it here at NAIFA, through “Frontline” and other publications.  And then when we ask them to do something through action alerts or other means, respond.  You know our strength is in our grassroots and we have… again we have over 60,000 people across the country, in every Congressional and State legislative district.

We ask people to respond to an action alert, to contact their regulators or their lawmakers, they respond and that shows the strength of NAIFA.

MAGENTA ISHAK: Great discussion Gary, thanks.

HOST: And thank you to both of you for being on our pod cast here today.  Well there you have it, stranger originated life insurance is bad for NAIFA members and their clients.  To learn more about this issue and what NAIFA is doing about it, go to www.naifa.org/advocacy.  You'll find a June 4th press release, several NAIFA “Frontline” articles and a new publication called “STOLI Alert.”  And be sure to join us next month for a one-on-one interview with David Woods regarding Life Insurance Awareness month.

Membership in NAIFA is all about your success. We give you the tools you need to grow your business and propel your career as an insurance or financial advisor. Learn more about becoming a NAIFA member and join today at www.naifa.org/join.

[This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.]

Closing Music Plays.

What the Repeal of the McCarran-Ferguson Act Means to Your Bottom Line

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Length: 10 minutes

Transcript

Congress is debating whether to repeal the McCarran-Ferguson Act and thereby weaken the authority of states to regulate the insurance industry. Controversy over property/casualty claims spawned by hurricane Katrina focused federal attention on the act. In lieu of state oversight, the Federal Trade Commission and Department of Justice (both of which lack the states' regulatory expertise) would have greater authority to enforce insurance regulations and investigate alleged violations.

In June's Advocacy podcast, Michael Kerley, senior vice president of federal relations at NAIFA, and Jill Edwards, NAIFA's director of federal relations, discuss the recent government effort to repeal the federal antitrust exemption for insurance in the McCarran-Ferguson Act and the impact this could have on the insurance industry and your bottom line. To become more familiar with the McCarran-Ferguson Act, listen to the podcast and find out what the Act says, why it's so important to your business, and why NAIFA is opposed to its repeal.

NAIFA McCarran-Ferguson Podcast
June 1, 2007

Opening Music Plays

HOST: Welcome to NAIFA's podcast, an ongoing series of interviews that allow our members to quickly learn about important legislative and regulatory issues and what NAIFA’s doing to protect your business interests. This is Andy Moyer, communications producer for NAIFA.

Right now, the McCarran-Ferguson Act is a hot topic in Washington, D.C. It’s a law that reaffirms state – not federal – but state jurisdiction over insurance regulation. Recently, there were calls by some in Congress to repeal McCarran-Ferguson. In the next few minutes, you'll learn more about the Act, why it's so important to your business, and why NAIFA is opposed to its repeal.

To become more familiar with the McCarran-Ferguson Act, we'll be talking with Michael Kerley, senior vice president of federal relations at NAIFA, and Jill Edwards, NAIFA’s director of federal relations. Mike, Jill, thank you for joining us today.

First of all, Mike, can you please explain the McCarran-Ferguson Act?

MIKE KERLEY: The McCarran-Ferguson Act came about in 1945 because the year earlier, the Supreme Court rendered a decision that undercut state regulation of the insurance business. Historically, insurance has been state regulated business. So in 1945 we, and other entities in the insurance industry, convinced the congress that we needed to have protection from federal intervention into the state regulatory system. So the McCarran-Ferguson Act was the result of that effort. It is simply safe to say, that were it not for the McCarran-Ferguson Act being in place today, the federal government, not the state government, would regulate the business of insurance.

HOST: Jill, if the Act has been in place since 1945, why the sudden interest now to repeal the insurance antitrust exemption?

JILL EDWARDS: Well, for many times, the congress has wanted to go in and repeal the limited anti-trust exemption. And I really underscore limited because it's limited to the extent that the state anti-trust laws don't apply. But in this case, in the post-Katrina era and the number of law suits that have been filed along the Gulf Coast over the issue of whether or not the wind or the water caused the damage and the denial of claims resulting from that debate there have actually been a couple members of congress who were a part of those lawsuits because they lost their home. And so they are helping to drive an effort to repeal the insurance anti-trust exemption because they believe, and I underscore the word believe, that insurers colluded to deny legitimate claims along the Gulf Coast.

HOST: And, why should NAIFA members care about the McCarran-Ferguson Act?

JILL EDWARDS: NAIFA members should care primarily for two reasons: One, for those who are multi-line agents. On the property causality side of the business, there is allowed information sharing through the ISO, which is sort of the entity that many of our members are familiar with that allow companies to share loss data. So that if a small or a mid-size company is entering a new market they have a sense of what their potential risk is so they can price their premiums. And through the sharing of data under McCarran and because the states are regulating it, that has allowed more competition to exist.

For the life side of the business there is a provision of the bill that would allow the federal trade commission to come in and selectively investigate insurance practices that have long been vetted and approved by the states. In essence you are creating another layer of federal investigations and authority over state regulation of insurance and in an environment where insurance commissioners, state governments, federal officials, insurance companies, agents, all agree that the current system of insurance regulation is inefficient, this is going to create more problems, not fewer. And at the end of the day, it's going to help put mid-size and small property casualty practices out of business if they are unable to share that loss data.

HOST: Do you want to add anything to that Mike?

MIKE KERLEY: Yeah, Andy, thank you. In addition to the regulatory indecision and the chaotic environment that Jill is talking about, there is another element at risk here. And that is of never ending lawsuits. Because McCarran was passed over 60 years ago, almost all of the legal issues have been settled, in fact I would have to say, all the legal issues have been settled. If we remove the McCarran-Ferguson Act or if you amend it substantially, all those legal questions are going to have to be re-litigated. I just want to say this will be a trial lawyer's dream come true. 

HOST: So what is NAIFA doing about it?

MIKE KERLEY: The first thing that NAIFA's doing about it, is educating our members Andy. It's been 27 years since this issue has been front and center for our members. We had a real dust up with the McCarran-Ferguson Act in 1980. So what we have to do is educate our members and we’re doing that via our Frontline legislative reports and via articles in Advisor Today and via speeches and presentations to NLCs [National Leadership Conference] and so on.

The second thing we are doing is educating members of congress. In all of my years here at NAIFA, I must tell you that this issue has more people confused on Capitol Hill than any other issue I have ever encountered. There is almost no institutional knowledge about what the McCarran-Ferguson Act is and what it does. So that's our second major component. And so Jill and I have been going around the Hill for the last couple of months actually and educating key members of congress on what McCarran-Ferguson Act, how it works, what it does, and why monkeying around with it is not a good idea.

HOST: Well, in light of what Mike said, Jill, what can our members do at the grassroots level to help illustrate NAIFA’s position on this issue?

JILL EDWARDS: Well, first of all, for those who are listening to this podcast, and you have friends and colleagues who will be concerned about this issue, we encourage you to let them know about this podcast because it is an easy way to hear about the issue, rather than read pages and pages of documents. We have an insurance regulatory reform website in which we include a section on this very topic and we encourage our members to stay informed and part of being a NAIFA member is at the grassroots level because ultimately you're the constituents of the members of congress and senators, not Mike and I. We only have our two senators and our congressmen at home too, just like you do. At the end of the day, members of congress need to know why it's important to the people that vote for them. You have to tell them that it's important to you. And that's why, through our Political Involvement Committee, through IFAPAC, we encourage our members to meet with their members in the districts and tell them what's important. And that's a very important part of this process. 

HOST: Great input Jill, I really appreciate that. Hopefully a lot people listening to this podcast will spread the word and get other people to listen as well. Do you know of other ways NAIFA members can stay informed on the McCarran-Ferguson Act Mike?

MIKE KERLEY: The most important thing for NAIFA members to remember is that legislative advocacy is an activity; it's not passive. So anyone listening to this podcast, we urge to basically take the initiative and learn about this issue by simply making use of the tools that are available to them. In addition to Advisor Today magazine, which comes to your door, in addition to the NAIFA Frontline legislative reports, which come in your email, we have a website devoted to this. The address is simply, naifa.org/advocacy/irr. There is everything you've ever wanted to know about this issue; right there at a click of a mouse, it can't be easier. But the first and foremost thing NAIFA members must remember is that this is a contact sport. It's not something you can just sit back and watch on Sunday afternoon.

HOST: Excellent comments Mike, thank you very much. And Jill, thank you for being here also. We appreciate both of you being a part of this podcast.

JILL EDWARDS: Thanks for having me.

MIKE KERLEY: It was our pleasure!

HOST: Success in defeating this proposal relies on grassroots efforts and strength in numbers. This means you, our NAIFA members, need to get involved. As we said before, you can continue to learn about this issue at the NAIFA website.  Once you've learned about this information, you can contact your legislators. This can be done very easily by clicking on the contact your member of congress icon located in the advocacy section of NAIFA's website.  Thanks for listening and be sure to check back at the beginning of every month for our next podcast.

Membership in NAIFA is all about your success. We give you the tools you need to grow your business and propel your career as an insurance or financial advisor. Learn more about becoming a NAIFA member and join today at www-dot-naifa-dot-org-slash-join.

This 2007 podcast is a copyrighted production of the National Association of Insurance and Financial Advisors. All rights are reserved.

Closing Music Plays.