Re: New Federal Bills Address Retained Assets, Ftc Authority

DATE: AUGUST 4, 2010

TO: NCOIL LEGISLATORS

FROM: SUSAN NOLAN

RE: NEW FEDERAL BILLS ADDRESS RETAINED ASSETS, FTC AUTHORITY

Members of Congress recently introduced, or announced that they would introduce, legislation on life insurance retained asset accounts (RAAs). Members also proposed a bill to grant the Federal Trade Commission (FTC) certain insurance authorities.

RETAINED ASSET ACCOUNTS

H.R. 5993

On July 30, Congresswoman Deborah Halvorson (D-IL) introduced H.R. 5993, the Securing America’s Veterans Insurance Needs and Goals Act (SAVINGS Act), that would, among other things:

·  require that insurers participating in a group life insurance program for servicemembers provide financial counseling to beneficiaries on:

o  pros/cons of keeping a lump sum payment with the insurer v. with a financial institution

o  RAA interest rates with the insurer v. rates with financial institutions

o  the FDIC insurance status of RAAs

·  prohibit insurers from charging fees to maintain the account

Sen. Schumer Legislation

Senator Charles Schumer (D-NY), in a Monday press release, said that he was developing legislation that would:

·  require any insurance company contracting with the federal government for military and other employees to offer lump sum payments as the default option for beneficiaries

·  require “full and fair disclosure” of RAA risks

·  make RAAs an opt-in and require sign-off by the beneficiary

The following material is available for your review:

·  SAVINGS Act (Thomas.gov)

·  Halvorson Press Release (7/30 Halvorson)

·  Schumer Press Release (8/2 Schumer)

·  Fallen Soldiers’ Families Denied Cash as Insurers Profit (7/28 Bloomberg)

·  Fallen Soldier Story Stirs Up Storm For Life Insurers (7/28 SNL Financial)

FEDERAL TRADE COMMISSION (FTC) AUTHORITY

Senators Mark Pryor (D-AR) and John Rockefeller (D-WV) on Monday introduced the Insurance Competition and Transparency Act of 2010. The bill would amend the Federal Trade Commission Act to authorize the FTC to investigate insurers and the insurance industry and conduct insurance studies without prior Congressional approval. The current FTC Act largely exempts insurers and allows the FTC to conduct studies and prepare reports only after receiving a request from either the Senate Commerce Committee or the House Energy & Commerce Committee.

The following material is available for your review:

·  Pryor/Rockefeller Press Release (8/2 Pryor/Rockefeller)

·  Insurance Competition and Transparency Act of 2010 (attached)

·  Current FTC Act Section 6 (Additional Powers of the FTC)(Cornell Law School)

For more information contact the NCOIL National Office at 518-687-0178 or the NCOIL Washington, DC, Office at 202-220-3014.