With insurance agents and financial advisors descending en masse on Washington, D.C., for the National Association of Insurance and Financial Advisors (NAIFA) Congressional Conference, skirmishes opposing new taxes and fees begin in earnest.
House Ways and Means Committee Chairman Rep. Dave Camp, R-Mich., has proposed levying as much as $583 billion in taxes and fees over the next 10 years from 50 proposals that have an impact on the insurance industry, according to a NAIFA legislative expert.
NAIFA President John Nichols said that lower tax rates proposed by Camp would come at the expense of long-term financial security for families and businesses, “and undermine the nation’s ability to plan for the future, save for retirement and protect against financial risks.”
As congressional lawmakers consider where to raise revenue and at whose expense, rallying the industry rank and file has become a familiar exercise in and around Washington this time of year, when legislative conferences are held by all manner of insurance interests.
Of the $583 billion in taxes and other levies imposed on insurance-related interests, nearly $225 billion comes from changes to retirement savings, $87 billion from market changes and insurance products and company taxes, and $272 billion from changes to the cost of doing business, said Judi Carsrud, NAIFA’s director of federal relations.
“Virtually all the proposals in the Camp draft are changes that would dramatically increase life insurance company, agent and/or policyholder tax bills, or they substantially increase the cost of doing business as an insurance agent/advisor,” Carsrud wrote in a blog post.
Carsrud also said the draft proposal requires that benefits be subject to a “significant risk” of forfeiture, which would “wipe out” nonqualified deferred compensation arrangements, which are structured around life insurance.
Proposed changes in how life carriers calculate deductions for funds set aside in reserve and how carriers calculate the deductions they take for commissions they pay agents ”would either hurt policy performance or reduce agent compensation,” Carsrud wrote.
A proposed freeze on the cost-of-living adjustments for retirement savings, the repeal of traditional individual retirement accounts (IRAs) and cutting pretax contribution limits “all serve to dis-incentivize employers from offering plans,” she also said.
NAIFA estimated that as many as 700 conference attendees will meet with House and Senate lawmakers this week.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].