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NAIFA
Frontline Association
of Health Insurance Advisors State
Legislation Federal
Legislation Arizona
House & Senate Contact Information NAIFA's
Legislative Action Alert Center For more information, contact Henry C. GrosJean at 623.435.8400
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HB2071 From: Field Communications A message to All Field Associates from John Vaccaro, head of U.S. Insurance Group Sales & Distribution --- From: Jonathan Paone [mailto:government_affairs@newyorklife.com]
October 1, 2009 Barracks Warriors - Distribution - Life and Health Insurance News
September 23, 2009 There were some bills that are worth noting that were passed and signed by our new Governor during this past session: HB2224 (Title 28) requires a person who has a third or subsequent motor vehicle violation within three years that does not produce proof of financial responsibility will have to in fact submit this proof before their license, registration, or plates are reinstated. It also reduces the authority of the courts to reduce or waive penalties imposed due to the above circumstance of not showing proof. HB2323 (Title 20) reduced the go-bare or waiting period for small employers who are uninsured from six consecutive months to 90 days so that they are able to apply for the HealhCare Group plans. HB2324 (Title 20) allows health insurers to issue policies to individuals that are exempt from certain mandated benefits. SB1180 (Title 28) made various changes relating to towing companies in that they will require the tow company to release a towed vehicle to a person designated in writing by an insurance company on the day the request is given to that towing company. SB1289 (Title 28) permits the release of personal identifying information contained in a vehicle accident report on request by a person involved in an accident or a licensed insurer of a person involved in an accident, or an attorney who is representing a person that is involved in an accident.
August 13, 2009 State of Arizona
To: Insurance Producers, Surplus Lines Brokers, Insurance Industry Representatives, Insurance Trade Associations, Life & Disability Insurers, Property & Casualty Insurers, and other interested parties. INSURANCE-RELATED BILLS ENACTED IN 2009: [1] This Substantive Policy Statement is advisory only. A Substantive Policy Statement does not include internal procedural documents that only affect the internal procedures of the Agency, and does not impose additional requirements or penalties on regulated parties or include confidential information or rules made in accordance with the Arizona Administrative Procedures Act. If you believe that the Substantive Policy Statement does impose additional requirements or penalties on regulated parties you may petition the Agency under Arizona Revised Statute Section 41-1033 for a review of the statement.
May 4, 2009 Legislative Update: Legislative Activity Report of January 12th 2009 As we all know Arizona’s budget deficit is center-stage for the 09 legislative session. For the current fiscal year there is a $1.2 billion shortfall. The deficit in 2010 is projected to be $3 billion! Until the current shortfall is dealt with not too much legislatively will be happening. There have been a number of bills filed already, but nothing that deals with our industry. The AZ Department of Insurance is planning on introducing CE for all agents, but so far do not have a sponsor, outside of Rep. Doug Quelland from my District who said he would be glad to sponsor a bill for us and is preparing to open a file to this effect. I will keep you posted. The in-coming Governor Jan Brewer has put together a transition team comprised of the following: Kevin Tyne, J Charles Coughlin, Jay Heiler, Doug Cole, Bas Aja, Lisa Atkins, Richard Bark, Linda Blessing, Drew Brown, Ernie Calderon, Lori Daniels, Lisa Hauser, Eileen Klein, Andy Kunasek, Dan Lewis, Cheryl Lombard, Alan Maguire, Tom Manos, Brian McNeil, Jim Pignatelli, Bill Post, Richard Silverman, Bob Walkup, Connie Wilhelm, Ted Williams, and Steve Zabilski. If any of your members should know anyone that is on this transition team please let me know. Henry C GrosJean December 1, 2008 ELECTION RESULTS
September 2, 2008 FROM: Christina Urias, Director of Insurance Legislative Update – Submitted June 12, 2008 – Henry C. GrosJean – AZ-NAIFA Legislative Chair Chapter version of LTC partnership legislation Physician paper sent to governor Legislative Update – Submitted February 19, 2008 – Henry
C. GrosJean – AZ-NAIFA Legislative Chair Bills being monitored so far: HB 2658 - requires legislators advocating a bill that mandates health coverage to submit a report relative to costs and impact of the mandate. Has been transmitted to the Governor for her signature on 04-22-08. HB2513 - This is a striker bill and has yet to be introduced; states that initiating or planning to initiate a life insurance policy for the benefit of a third party investor who has no insurable interest in the insured is a violation of ARS 20-1104, which states that no person shall procure an insurance contract on another without an insurable interest in the insured. ALIC is behind this. Still alive. SB1093 - adds training requirements for individuals who sell long-term care insurance and makes changes to pre-existing condition limitations for long-term care insurance policies. Dead, but was resurrected in SB1223 as a strker bill. SB1086 - requires all insurance producer license applicants to pass an examination within the one-year period preceding their application submission. Still alive. HB2319 - establishes a new income tax credit for long-term care insurance premiums. Dead. HB2145 - requires a mental health parity provision for health insurers. Dead, but was resurrected in HB2209. The bill now is in Appropriations. HB2166 - removes the 180 day waiting period before an employer can enroll in the healthcare group. Dead. HB2099 - allows insurers to take a credit against their insurance premiums tax liability for donations to a school tuition organization. Dead. HB2081 - allows captive insurers to cover employment practices liability risk. Still alive. --- NEW YEAR, NEW NAIFA, "NEW LOOK" for advocacy Communications - click here for PDF introduction. 12/7/07
NAIFA and ACLI Publish STOLI Alert Volume 1, Issue 5 --- 11/15/07
Federal Estate Tax Subject of Senate Finance Committee Hearing
Misters Rhoads and Sukup represented small business and farm interests and testified on the cost and complexity of estate planning under current law. Mr. Teitel testified as an estate planning lawyer but did not take a position on whether the estate tax should be retained or repealed. Mr. Buffett, on the other hand, supported retaining the estate tax at approximately the same revenue raising level as today, although indicated he would not oppose reconfiguring it. --- Federal Legislation Update for NAIFA Members – Henry C. GrosJean – AZ-NAIFA Legislative Chair As of October 31st 2007 - Pending Legislation for Health and Welfare Plans HR493 / S358 Genetic Information Nondiscrimination Act of 2007 Purpose: This bill would bar group health plans or health insurers from requesting, requiring, or purchasing genetic information for underwriting purposes, to deny health coverage or to raise premiums. Outlook: The bill is being prevented from moving to a vote and is supported by the Bush Administration. S558 Mental Health Parity Act of 2007 Purpose: It would provide mental health parity for employers with 50 or more employees. Outlook:This could be enacted this year. The Senate bill has been endorsed by business and health insurers. A House version HR1424 is much more restrictive and does not have the support from business. S2219 / HR3932 Medicare Prescription Drug Savings and Choice Act Purpose: It would establish a Medicare Part D prescription drug plan that would be operated by the federal Medicare program and compete with the privately sponsored plans that are currently offered. Outlook: Is opposed by most Republicans and the Bush Administration. HR2638, HR3161, HR3043 Prescription Drug Importation Purpose: These bills would prohibit customs officials from seizing prescription drugs crossing the border from Canada. They could also be purchased over the Internet and by mail. Outlook: The current Administration and the pharmaceutical industry remain staunchly opposed of any kind of legislation that would legalize drug importation. HR3963, S2152, S2193 Low-Income Premium Assistance Purpose: They would allow states to offer a premium assistance subsidy under both the CHIP and Medicaid programs to all individuals under age 19 and the parent of such individual for qualified, employer-sponsored coverage. Outlook: These bills were mainly introduced to highlight differences between the Democrats and the Republicans. S1693, HR2406, HR2991 Health Information Technology (IT) Bills Purpose: They would establish a public-private partnership to provide recommendations to HHS for the exchange for health information. They would include privacy protections, etc. Outlook: Despite strong bipartisan support budget constraints and competing domestic issues may push consideration until 2008. S1753 Wellness Tax Credit (Healthy Workforce Act) Purpose: It would provide a ten year tax credit of up to $200 per employee for the first 200 employees and up to $100 per employee thereafter to employees that provide qualified comprehensive wellness programs. Outlook: It is expected to move some time this year. S504, HR3363 Long-Term Care Trust Account Act of 2007 Purpose: They would create a new type of savings account to cover long-term care costs. Individuals who establish a long-term care trust account would be able to contribute up to $5,000 annually, adjusted to inflation, to their account and receive a refundable 10% tax credit. Outlook: They have bipartisan support, but the fate of such legislation remains unclear.
Legislative Update – Submitted August 14, 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair Federal - Health and Welfare S. 1753 was introduced that would provide tax credits to employers that implement workplace wellness programs aimed at encouraging employees to lead healthier lives and prevent chronic illnesses. H.R. 2948 and S. 1652 were introduced that would permit health insurance to be purchased from funds in a health savings account. H.R. 2833 was introduced that would provide additional limitations on pre-existing condition exclusions in group and individual health plans. H.R. 2842 was introduced that would prohibit pre-existing condition limitations from being imposed on children under age 19. H.R. 3363 was introduced that would allow qualified long-term care insurance to be offered under cafeteria plans and health flexible spending arrangements. The 48th Legislature, 1st Regular Session ended June 20th 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair I am pleased to report that it was not an eventful session relative to our industry. There were a number of bills that AZ-AIFA supported. They are not in any particular order and descriptions are very brief. Some are also listed here for informational purposes only, however all have been signed by the Governor. For more detail go to: www.azleg.gov SB1073 involved cash surrender payments under deferred annuities that had to fall within 30 days of the contract termination. SB1203 involved further definitions of variable group contracts as well as establishing new requirements for variable group contractors. HB2134 involved the future implementation of a uniform health questionnaire for small employer health insurance. HB2405 allows an insurer to reduce WC insurance premiums by 5% if the employer conducts drug and alcohol testing of employees. SB1098 allows health insurance providers to offer incentives under a wellness program that meets certain conditions. SB1204 decreased the number of people necessary for a group disability policy from five to two and eliminates the definition of a participating provider. And, there was one bill that we officially opposed although it passed. This was HB2439, which increased the number of continuing education credit hours for hearing aid dispensers. I gave testimony to the effect that it was encouraging to know that dispensers had enough training to install these aids so the general public could hear and hopefully understand what an insurance agent was selling them! For some reason the legislators did not find this particularly amusing. Legislative Update – Submitted May 15, 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair HB2405 was signed by the Governor. This bill allows an insurer to reduce an employer's worker's compensation insurance premium by five percent if the employer conducts drug and alcohol testing of employees. Legislative Update – Submitted February 19, 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair SB 1073 - deferred annuities;
cash surrender; payment From a prior update
this bill requires insurance companies to pay cash surrender For the bill: AZ-AIFA,
ACLI, Prudential, MetLife. SB 1506 - tax-credit;
business health insurance From a prior update it establishes an individual income tax credit for small businesses that provide health insurance to their employees, beginning in tax year 2008. For the bill: CIGNA,
BC/BS, NFIB, America’s Health Insurance Plans, East
Valley Chambers of Commerce Alliance, AZ Restaurant Assoc., AZ-AIFA, United Healthcare,
Golden Rule, AZ Chamber of Commerce, Greater Phoenix Chamber. SB1532 - tax credit;
long-term care insurance Purpose is to establish an income tax credit, beginning Jan of 08 for long-term care premium costs, subject to specified conditions and limits. For the bill: SCAN
Health Plan, America’s Health Insurance Plans, East
Valley Chambers of Commerce Alliance, AZ-AIFA, AZ Assoc. of Homes & Housing
for the Aging, AZ Health Care Assoc., AARP. Legislative Update – Submitted February 13, 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair FACT SHEET FOR S.B. 1532 tax credit; long-term care insurance Purpose Establishes an income tax credit, beginning January 1, 2008, for long-term care premium costs, subject to specified conditions and limits. Background Long-term care refers to the services needed when an individual’s ability to care for himself or herself has been limited due to a chronic illness or disability. Long-term care needs may be permanent or limited to a relatively short time. Some individuals require constant care in an institution such as a nursing home, while others may need assistance with activities of daily living such as bathing or eating. Long-term care insurance is one way of paying for these services. Like other insurance programs, consumers pay premiums that vary depending on their age and health status and on the level of coverage, benefits and options selected. Benefits are claimed when long-term care services are needed, such as when a consumer must enter a nursing home, either permanently or temporarily. According to the Kaiser Commission on Medicaid and the Uninsured, as of 2005, approximately 10 million people need long-term care in the United States, including 6 million elderly and 4 million children and non-elderly adults. The General Accounting Office estimated that in 2000, private insurance accounted for 11 percent of total payments for long-term care, while Medicaid and Medicare accounted for 45 and 14 percent, respectively. The Department of Insurance (DOI) regulates long-term care insurance in Arizona. DOI reports that, as of 2005, 104,729 individuals in Arizona have long-term care insurance (including both individual and group policies). S.B. 1532 could provide incentives for additional people to purchase long-term care insurance. Current statute allows Arizona taxpayers who do not take a standard deduction to deduct specified items when computing taxable income. Examples of deductions include certain expenses for medical care, interest on certain home mortgages, and certain charitable contributions. Other deductions are specified in federal law. S.B. 1532 prohibits taxpayers from claiming a deduction and taking a tax credit for the same expense. This prohibition applies to all expenses for which a taxpayer is eligible to claim a deduction and a credit. The fiscal impact of the bill to the state General Fund depends upon how many individuals take advantage of the credit and the amounts of the credits taken. Provisions
Legislative Update – Submitted January 31, 2007 – Henry C. GrosJean – AZ-NAIFA Legislative Chair Bills of possible interest and/or are being monitored: SB1073 - deferred annuities;
cash surrender; payment SB 1217 - filings;
securities dealers HB2086 - insurance;
cancer screening examinations HB2157 - income tax
credit; diabetes expenses HB2449 - insurance contract;
policy contents Legislative Update – Submitted January 29th 2007 Henry C. GrosJean – AZ-NAIFA Legislative Chair Bills of possible interest and/or are being monitored: SB1032 - burden of proof;
emergency treatment SB 1288 - insurance;
automobile rates; zip codes SB
1271 - AHCCCS; healthcare group coverage; eligibility SB1203 - variable group
contracts HB2509 - insurance score;
credit history December 15, 2006 The U.S. Senate recently passed HR6111 which is scheduled to be
signed by the President.
Novemerber 13, 2006 Henry C. GrosJean, Immediate Past President and 2006/07 Government Relations Chair We, as members, are all aware that NAIFA’s top priority is legislative and regulatory advocacy. The impact of this effort will affect our Member’s bottom-line, which is part of the very reason for NAIFA’s existence. A major reason why NAIFA made this part of their refocused mission statement is because our industry is high value tax target. Why is that? Think about this: In 2004 alone, the Federal deficit was $428 Billion. That same year the life insurance industry transferred $402 Billion to policyholders, beneficiaries, and annuitants tax free! One does not need to be an economist to see that these dollars represent possible revenue to the US Treasury. If this is not enough take note that one-third of all “tax expenditures” or “negative revenue” falls within the domain of the insurance and financial services industry. This fact is supported by the Joint Committee on Taxation which researches potential sources of tax revenue for the two congressional tax writing committees – House Ways & Means and Senate Finance. The “tax expenditures” that fall within our industry are:
In view of this list it’s very obvious that there is not a single insurance or investment product that we offer our clients that does not have an associated tax benefit or advantage. And the reason we have these tax benefits to offer is because of the historical lobbying efforts of NAIFA. They have made these a reality. For it has and will remain a viable economic and social policy to encourage and incentivize consumers in assuming responsibility for their long-term financial security. Only two years ago NAIFA was able to defeat two attempts at taxing the inside build-up of life insurance. We all know that over the next two years lawmakers will be looking at the challenges of the U.S. budgetary deficit. Also, keep in perspective that over the past 12 years the GOP-controlled Congress has passed or advocated a host of bills and regulations helpful to insurance companies and not just agents. For example with the recent changes to Medicare in late 2003 it is estimated that over $12 billion will be transferred to insurers over the next few years. And this year there was real movement on federal chartering for insurers. It is likely that this initiative and others will come to a halt with the new regime entering Congress as Democrats have historically opposed a number of insurance industry-favored initiatives. So, it should be no secret that in view of the transfer of power in Congress our target just got bigger. And we as Members not only have to step up our involvement with APIC and IFAPAC, but must stiffen our resolve in getting this message out to the apathetic majority of agents.
September 21, 2006 Henry C. GrosJean, Immediate Past President and 2006/07 Government Relations Chair For 2007 Legislative Session: AZ Department of Insurance may introduce NAIC model legislation requiring all agents who sell LTC to take an approved LTC course / exam prior to selling the product. There will be legislation introduced to standardize the health questionnaire for small business amongst all of the Accountable Health Plans. Continuing Education for all agents may again be introduced along with some compromises to get it enacted, such as, a grandfather clause for those in the business twenty or more years, and mono-line agents or those who strictly sell property-casualty insurance. A universal health insurance bill will also be re-introduced by Rep. Rios, however, it will only get an initial audience and will probably not go anywhere. And, the Arizona Department of Insurance has indicated that they would support an ethics exam prior to license issue. --- SB1170 permanently repeals the Arizona estate tax. Because the Arizona estate tax is based on the federal credit for state death taxes, the Arizona estate tax was subsequently phased out between 2002 and 2005. This bill permanently repealed the Arizona estate tax. While no tax will be owed on an estate of a person who dies after 12-31-04, the state General Fund may still continue collecting estate taxes through March 31, 2006 (the estate tax return may be filed no later than 9 months after a person's death, but the filer may be granted a 6 month extension). One other provision of this bill was that it subtracts from the Arizona gross income the amount of federal estate taxes paid in the current taxable year. The bill was sponsored by Senator Dean Martin (who is now running for state treasurer, and Senator Bob Blendu (a stockbroker). ---- Annual Wrap Up – by 2005/06 President, Henry GrosJean: Supported HB2698 entittled "small business health insurance plans". This bill, which was signed by the Governor, exempts from specified insurance coverage requirements, including certain mandates, health insurance that is issued to businesses that employ 2 to 25 persons and that have been uninsured for at lease six months. Supported HB2162 which was also signed into law. This was a correction bill to current insurance statutes and follows the requirement that an insurance producer or an insurer should have reasonable grounds for believing that the recommendation for the purchase of an annuity is suitable for annuities consumers. The content of this bill mimics what any insurance agent and carrier perform relative to their due diligence. SB1070 was also signed by the Governor. This bill did not call for us to support and basically it removes a participation percentage relating to group life insurance policies. Specifically, it removes the requirement that a group life insurance policy, on which part fo the premium is to be derived from funds contributed by the insured members (or employees) only be placed if at least 75% of the eligible members participate. Did not support HB2627. This bill would have removed the exemption for securities and insurance dealers regarding criminal and civil penalties for exploiting incapacitated or vulnerable adults. I logged on-line that NAIFA-AZ was in opposition and my on-line comment as to the effect that banks should be included was read by the Chairman of the committee in front of the public. The bill was passed in this committee, however, Senator Linda Gray (D-10) decided that in view of my comment relative to the bank inclusion, was intent on placing an amendment on the floor that would have included banks. I subsequently received a call from the bill sponsor, Rep. Ted Downing (D-28) and was asked that if we (NAIFA-AZ) would be willing to discuss a compromise relative to our position. I declined the offer. The bill never made it out of the Senate and in a subsequent conversation with the AZ Department of Insurance the threat of the floor amendment was probably the reason for the bills' failure. Did not support HB2782 which would have placed Life Settlement
contracts under the jurisdiction of the AZ Department of Insurance
from the AZ Securities Department. This issue will probably re-surface
in the 2007 legislative session as one of the sponsors wanted to
talk to us following the fact that the bill did not make it out
of the first committee where it was introduced. HB2217 was sponsored by Rep. Doug Quelland from my district per
my request. I spent a great deal of time at the legislature
on this bill and, yes, it did affect my business. However, requiring
insurers to provide more information to brokers and employers as
to the basis on which their rates are developed is an important
step towards affordable health insurance. This bill was signed by
the Governor on April 12. Starting, probably in July, all health
insurers or Accountable Health Plans will have to file their Base
rates, or best rate possible, and their Index rates, or average
rates, with the AZ Department of Insurance. This information will
be available to employers and their insurance brokers.
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April 14, 2006 -
What Insurance Agents and Brokers Should Expect under the New Anti-Money Laundering Regulations for Life Insurance Companies The USA PATRIOT Act includes provisions intended to prevent the financial services industry, including the insurance sector, from being used for money laundering and terrorist financing by criminals and terrorists. The Act requires insurance companies to establish anti-money laundering (AML) programs that comply with minimum standards developed by the Department of the Treasury. Regulations issued by the Treasury Department and its Financial Crimes Enforcement Network (FinCEN) establish minimum requirements for insurance company anti-money laundering programs and require insurers to report suspicious transactions. Although insurance agents and brokers are not required to have their own anti-money laundering programs, the Treasury Department and FinCEN have stated that insurance agents and brokers are expected to play an important role in implementation of these programs by insurers. ACLI’s member insurance companies are mindful of the burden that inconsistent or conflicting programs could impose on agents and brokers, and are cooperating on various means of avoiding any undue burden, while assuring the effectiveness of the industry’s efforts to combat money laundering. This document has been prepared by the American Council of Life Insurers (ACLI) in conjunction with the National Association of Insurance and Financial Advisors (NAIFA) and is intended to provide agents and brokers with a brief description of money laundering and terrorist financing and the ways in which the insurance industry might be used to engage in such activities. In addition, it serves as an introduction to the requirements imposed by the Treasury Department regulations, and some of the means by which brokers and agents may be integrated into insurers’ AML programs. What is Money Laundering and Terrorist Financing? Money laundering. Money laundering is a varied and often complicated process that can, but does not always, involve cash transactions. Illegally-obtained money is filtered through a series of transactions that eventually make the money appear to be obtained from “clean”, or legal, activities. The money laundering process has been described as having three phases that often overlap:Placement—Injecting ill-gotten proceeds, including cash, into the financial system through transactions such as bank deposits or the purchase of certain insurance productsLayering—Separating illicit proceeds from their criminal source through complex financial transactions Integration—Putting the proceeds back into circulation in the economy, with the appearance of legality. Terrorist financing. Terrorist financing involves the use of money, which may be lawfully obtained, to fund illegal activities. Because the transactions often have a legitimate origin and can often involve small amounts of money, terrorist financing can be more difficult to identify than money-laundering activities, although an effective anti-money laundering program can help prevent the use of funds for terrorism activities. What Responsibilities Will Agents and Brokers Have Under the New Rules?The new insurance regulations do not require insurance agents and brokers to establish anti-money laundering programs or to report suspicious transactions themselves. However, FinCEN has made clear that life insurance agents and brokers will have an important role to play in insurance companies’ anti-money laundering programs because they have direct contact with customers and are thus often in the best position to gather information and detect suspicious activity. To assure that insurance companies and their distribution partners collaborate in preventing money laundering, the new rules require life insurance companies to integrate agents and brokers into their anti-money laundering programs and to monitor the agents’ compliance with the programs. The preamble to the rules states that if efforts to integrate agents into insurance company programs are ineffective, FinCEN may reconsider its decision not to require agents and brokers to establish their own programs. The regulations are effective on May 2, 2006. On that date, insurance company programs must be up and running. There are two new regulations requiring collaboration between insurance companies and their agents or brokers. In general, the first requires each insurance company to develop and implement a written anti-money laundering program, applicable to “covered products,” that is reasonably designed to prevent the insurance company from being used to facilitate money laundering or the financing of terrorist activities. These programs must (a) include risk-based policies, procedures and controls that, among other things, “integrat[e]” the company’s insurance agents and insurance brokers into its anti-money laundering program,” (b) designate a compliance officer responsible for the program, (c) provide for ongoing training of individuals, including agents and brokers, with responsibilities under the program, and (d) provide for independent testing of the program, including testing with respect to compliance of agents and brokers. The second rule requires insurance companies to report “suspicious activities” and to establish procedures to obtain information from agents and brokers, among others, necessary to detect and report those transactions. Each insurance company is required to establish an AML program that is “risk-based,” which means that each company’s program must address the money laundering risks arising from the company’s particular product mix and unique business practices.“Covered Products.” The rules are not applicable to all insurance products. Rather, the Treasury Department identified categories of “covered products” that in its judgment presented sufficient AML risk to justify regulation. “Covered products” are defined to include:
Accordingly, property-casualty coverage, health insurance, and term life insurance, among other kinds of products, need not be included in an insurance company’s AML program. Insurance companies may offer guidance on which of their products are covered under their programs. Customer Information. The new rules require insurance companies to collect customer information from agents and brokers, among other sources, to support their anti-money laundering programs and to detect and report suspicious transactions. FinCEN has made clear that insurance agents and brokers have a crucial role to play in this area:
Because each company’s program must
be risk-based, agents and brokers should expect to collect and retain
information needed to assess the risk associated with particular business – in
particular, to identify customers in high-risk businesses
or high-risk geographic locations, or those using products
or services that may
be more susceptible to abuse in money laundering activity. Efforts will be made
to assure that
agents and brokers who
sell insurance
products through broker-dealers
that have their
own anti-money laundering
programs
will not be subject
to inconsistent
insurance company programs. These registered representatives
will likely experience little, if any, change to their current customer
due diligence requirements with respect to sales of variable products. Methods of Payment.
Certain forms
of payment – including cash,
money orders, traveler’s checks, and bank checks – can
be used in the placement phase of a money laundering scheme. To
manage this risk, companies may set limits on the forms of payments
that will be accepted and the amounts acceptable for some of them. The
goal is to reduce the chances that the insurance business will be involved
in money laundering, without excluding forms of payment with a legitimate
business purpose. Because
agents and brokers often
collect at least the first
premium due under a policy,
they may be
called upon to
inform customers of these
standards and enforce them. Suspicious Transactions. Insurance companies will be developing
controls and procedures to identify and report suspicious transactions – in
general transactions aggregating $5,000 or more that a company has
reason to suspect (i) involve funds derived from illegal activity or
are intended to hide funds derived from illegal activity, (ii) are
designed to evade reporting requirements imposed by Federal law, (iii)
have no apparent lawful purpose or are not the sort in which a particular
customer would be expected to engage, or (iv) that involve the use
of the insurance company to facilitate criminal activity. Significantly,
reportable transactions are not limited to a narrow definition of money
laundering. They
include any effort to involve
an insurance company in
illegal activity, and may
even include lawful transactions
that are atypical
for the customer involved
and for which
there is
no reasonable
explanation. Although insurance
agents and
brokers are
not independently
required to
report
suspicious
transactions,
the regulation
makes clear
that agents
and brokers are expected
to
work with
insurance companies in
identifying
suspicious
transactions
that the
company must report: An insurance
company
is responsible
for reporting
suspicious transactions
conducted
through
its insurance
agents
and brokers. Accordingly,
aninsurance company shall establish and implement policies
and procedures reasonably designed to obtain customer-related
information necessary
to detect suspicious activity from all relevant sources,
including from its insurance agents and brokers… Agents
and brokers
are often in
the best
position to detect
suspicious
activity – for instance, customers who are resistant
to requests for information, who are indifferent to the features of
a product, except for withdrawal rights, or who seek products inconsistent
with their apparent needs. Companies are likely to notify agents
of “red flags” that should be called to the insurance company’s
attention. Under
federal
law,
insurance agents and brokers,
as
well as
insurance
companies,
are
protected from
liability
to
customers for disclosing
possible
criminal
activity
to
their insurance
companies,
law
enforcement, and certain
government
supervisory
agencies.
Suspicious
Activity
Reports
and
the fact
that
they have been filed
must
be
kept confidential. In particular, customers cannot be notified
that a suspicious activity has been reported. Training
for
Agents
and Brokers. The new regulations require
companies to train their agents and brokers regarding their responsibilities
under the company’s anti-money laundering program. The rules
state that the company may satisfy this requirement by
directly training its agents and brokers or by verifying
that its agents and brokers
have received adequate training through another insurance
company or by a competent third-party. These programs
are expected to be tailored
to the needs of agents and brokers and to include training
on identifying suspicious customer behavior and transactions
as well as on procedures
to report suspicious activities to the company. Testing
the
Effectiveness
of
the
Anti-Money
Laundering
Program.
An insurance
company is
required
to conduct
independent
testing
as to
the effectiveness
of
its anti-money
laundering
program,
including
the
compliance of its agents
and brokers.
The
Internal Revenue
Service
will examine
insurance
companies
on
the adequacy
and effectiveness
of
their anti-money
laundering
programs. Contractual
Arrangements
With
Agents
and
Brokers. (Note:You may need the free Adobe Acrobat Reader to view/print the above.) November
11, 2005 - Tax Reform
Panel Report - Initial Summary and Analysis (in PDF format) -
(Note:You
may need the free Adobe
Acrobat Reader to view/print it.) Report of the President’s Advisory Panel on Federal Tax Reform – Initial
Summary & Analysis
Repeals A.R.S. 20-1131.01:
Amends A.R.S. 33-1126:
The bill became effective
immediately upon signature by the Governor. Another notable bill was HB 2189,
relating to producer license exams.
Our members who are engaged in hiring
new agents should become
familiar with this Title 20 amendment.
Here are the details.HB 2189, insurance producer
license exam (Ch. 126)
Amends A.R. S. 20-289.01:
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June 16, 2005 - from Cliff F. Wilson, CLU, ChFC, LUTCFExciting news from the NAIC meeting held this past few days in Boston. NAIFA has worked closely with NAIC on three recent issues that were addressed and action was taken, which we support. They are:
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Dear NAIFA Member: NAIFA advocacy
is paying off in our battle to prevent states from creating
a “second-class” license
to sell only term life insurance. Last week, an NAIC
working group made a
powerful statement that supports NAIFA's opposition
to the establishment of term
licenses.
This follows the success of NAIFA-Mississippi members
in derailing the proposed license in their state, and
the aggressive fight against the
concept by NAIFA members in Alabama. At its March
national meeting, the National Association of Insurance
Commissioners (NAIC) Producer Licensing
Working Group adopted
a resolution condemning legislation introduced in
some states that would create a limited line license
to sell only term life insurance. The Working
Group warned that a term license would not preserve
necessary consumer protections and reaffirmed NAIC
policy that there should
be only five
limited line insurance licenses (as provided in the
Producer Licensing Model Act). The resolution came
at the request of North
Dakota Insurance
Commissioner Jim Poolman, who expressed objection
to the term license proposals that have been introduced
in Alabama, Illinois and Mississippi,
and are being considered in several other states.NAIFA
strongly opposes term license proposals and NAIFA Senior
Vice President Bill Anderson testified in support
of the Working Group's
resolution. Anderson expressed NAIFA's position
that term license proposals are bad public policy because
they require less pre-licensing, license
exam and continuing education requirements than
are required for a full life insurance license, and would
enable licensees
to
sell term insurance
to consumers without any understanding of other
life insurance products. Creation of a new limited line
license to sell only term insurance also
flies in the face of industry and regulator efforts
to reduce the confusing panoply of limited line
licenses. Consistent
with NAIFA's position opposing term licenses, the NAIC
resolution states that “the Producer Licensing Working
Group recommends the NAIC membership reject any
and all proposals which directly or indirectly establish
a limited line license
for producers
to sell term life insurance because the implementation
of such limited
line license would not preserve the necessary
consumer protections and would not be consistent with
the adopted uniform licensing
standards
of the NAIC.”This resolution,
which must be further adopted by NAIC's D and Executive
Committees, sends a
strong statement to states that are considering
term license legislation
that such bills do not comport with
NAIC policy and should be rejected. The NAIC
working group's resolution should be very useful
to NAIFA associations that face term license
proposals in their states. A copy of the resolution is
available
online at www.naifa.org/pdf/NAIC_res_03132005.pdf. NAIFA members
are urged to be vigilant in opposing term license proposals
and to alert me if this
issue arises in their state.
Thank
you for supporting NAIFA and for protecting
our industry and consumers with this important
advocacy effort. Very truly
yours, Save the
Date - 2005 NAIFA Annual Convention and Career Conference |
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Dear NAIFA
Member:The NAIFA
federation's long-standing relationships with state legislators
and insurance regulators are
once again bearing fruit. At
a recently completed meeting of the National Conference
of Insurance Legislators (NCOIL), NCOIL adopted a
resolution opposing efforts to expand
state insurable interest laws to permit private investors
to purchase life insurance on the lives of unrelated
individuals. NCOIL is an influential
organization of state legislators who focus on insurance
legislation and issues in their respective states.
There was virtually no opposition
to the resolution by members of the NCOIL Life Insurance
Committee, where the resolution was introduced and
discussed in detail. The resolution
was initiated and drafted by NAIFA, AALU and the ACLI
and has been under consideration
by NCOIL since
last
fall. NAIFA,
our state associations and AALU had made extensive
efforts to line up support for the resolution among
the NCOIL membership. State association
leaders and lobbyists discussed the issue with NCOIL
member legislators prior to the meeting, and NAIFA
Senior Vice President
Bill Anderson put
his extensive network of contacts to use at the NCOIL
meeting in laying the groundwork for the smooth passage
of the resolution. NAIFA has
been at the forefront of efforts to stop the expansion
of state insurable interest laws
that
would permit investors
to buy and
own life insurance policies on strangers, a practice
known as investor-owned life insurance (IOLI).
Starting in late 2004, NAIFA, its state associations,
and AALU undertook a large-scale proactive effort
to educate state lawmakers and regulators about
the IOLI issue. These efforts have had an impact,
and we have seen fewer legislators willing to sponsor
IOLI legislation in 2005. NCOIL will transmit copies
of the resolution to state legislative
leaders, and the resolution will be very helpful
in our efforts to continue fighting IOLI proposals
in the states. Sincerely, Save the
Date - 2005 NAIFA Annual Convention and Career Conference |
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Industry
Welcomes Class-Action Victory The U.S.
Senate today voted 72-26 to pass S. 5, a bill that could discourage
lawyers from organizing some types of lawsuits.The
bill, sponsored by Sens. Charles Grassley, R-Iowa,
and Herb Kohl, D-Wis.,
would limit the ability of lawyers who organize class-action
suits to shop for friendly courts. One provision
would restrict "venue
shopping" by
transferring the jurisdiction of most large, multistate class-action
suits filed in state courts to the federal courts.The bill
also would require a plaintiff to bring a claim in a venue with
a substantial connection
to the alleged injury; require lawyers that organize
the suits to give class members a clear explanation
of their rights; and
require judges to take a class look at settlement
arrangements designed so
that class members get compensation in the form of
coupons rather than in
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NAIFA Lauds Senate Vote for
Class Action Reform FALLS CHURCH, VA – The National Association of Insurance and Financial Advisors, the nation’s largest member association of insurance agents and financial advisors, commended the U.S. Senate today for passing S. 5, the Class Action Fairness Act of 2005, and taking an important step toward ending frivolous class-action lawsuits. The bill, sponsored by Sen. Charles Grassley (R-IA) and Sen. Herb Kohl (D-WI), would allow the transfer of large, interstate class action litigation from state to federal courts where these cases have a much better chance of being adjudicated fairly. A similar version of the bill has passed the House of Representatives the last four Congresses and will likely move quickly through the 109th.“Frivolous class action lawsuits heard in state courts are hurting the insurance industry’s ability to compete in the marketplace,” said C. Robert Brown, CLU, LUTCF, NAIFA’s president. “Passage of class-action reform will stop lawsuits that for years have diverted financial resources from product development, innovation and agent compensation, among others, to attorney ’s fees and litigation costs.”Mr. Brown also pointed out that these frivolous lawsuits have often left those in the class with little, if anything, at settlement, with plaintiffs’ attorneys collecting large payouts for themselves. The Class Action Fairness Act would help prevent such settlements.Class-action reform has been on NAIFA’s agenda for years. NAIFA is an active member of the Class Action Coalition, which includes a number of insurance companies and insurance trade associations. “We’re pleased to see this very important piece of legislation move through the Senate,” said an elated David F. Woods, CLU, ChFC, LUTC, NAIFA’s chief executive officer. “Reform is desperately needed. President George Bush called special attention to it in his State of the Union address last week. The time for change has come.” About NAIFA: Based in Falls Church, Va., NAIFA is comprised of 800 state and local associations representing the business interests of 225,000 members and their employees nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. The NAIFA umbrella includes three specialty organizations: Association for Advanced Life Underwriting (AALU), the Association of Health Insurance Advisors (AHIA) and GAMA International. |
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NAIFA-Arizona
Legislative Watch HB2341 would simplify A.R.S. 2311 by eliminating any reference to the “index rate.” Statute would read that the rating practice or premium rate charged to a small employer would not vary by more than sixty percent of the “base rate.” Benefits of HB2341 Group Health Insurance would become more affordable to the largest employer group in Arizona and would go a long way in reversing the growing uninsured problem. And, it would help to illustrate by way of their premiums that Arizona employers are not being selected against. HB2290 In November 1994, Arizona voters approved Prop. 200, the Tobacco Tax & Health Care Act. It increased cigarette tax by forty cents. Part of the funding goes to the Medically Needy Account. Provisions of HB2290 Requires that $500,000 be deposited into the Health Crisis Fund on January 1 and July 1 of each fiscal year and eliminates the requirement the one million be deposited into the Fund on July 1 of each fiscal year. Requires that before April 15th of each year, JLBC to audit the Fund and report to the Legislature on fund expenditures. Requires that DHS report to JLBC within 30 days of any monies from Fund being expended and eliminates the requirement that DHS report to JLBC within 90 days of the termination of the “crisis.” Amendments to HB2290 Eliminates the requirement of JLBC conduct an audit of the Fund and replaces it with a requirement that JLBC conduct a review of the Fund. HB2189 changes the time period in various stages in applying for an insurance producer license and taking the related exam.Provisions of HB2189 Fine tunes the NAIC Model adopted in 2001 requiring applicants for the insurance producer license to pass the license exam within the 120 day period prior to the day the DOI receives the application. Prohibits the DOI from allowing applicants for the insurance producer license to apply more than four times within a 12 month period. SB1036 Permits health care providers to provide patient information to a defendant’s attorneys without violating the doctor-patient privilege; prescribes qualifications for expert witnesses in medical malpractice and vulnerable adult-abuse cases; and makes apologies or other similar gestures by health care providers inadmissible in court as evidence of liability or an admission against interest. Provisions of SB1036 In brief, expands current law regarding the waiver of doctor-patient privilege. Specifies that, if a claim or lawsuit for bodily injury or wrongful death is filed, all medical privileges, including doctor-patient privilege, are waived because the patient’s or decedent’s medical condition has been placed at issue. Adds malpractice claims and the abuse of incapacitated adults to the class of lawsuits requiring expert certification before the case can proceed. Allows the trial court to disqualify expert witnesses on other grounds. Prohibits expert witnesses from testifying if their fee is contingent upon the outcome of the case. Numerous other provisions. Submitted
by: |
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FOR IMMEDIATE RELEASE About NAIFA: Based in Falls Church, Va., NAIFA is comprised of 800 state and local associations representing the business interests of 225,000 members and their employees nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. The NAIFA umbrella includes three specialty organizations: Association for Advanced Life Underwriting (AALU), the Association of Health Insurance Advisors (AHIA) and GAMA International |
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Coalition to Support PLMA Amendment
in Current Form January 24 – A coalition of life insurance trade organizations again commended the National Association of Insurance Commissioners (NAIC) for adopting “tough but fair” changes to the Producer Licensing Model Act (PLMA) that will bring greater transparency to producer compensation arrangements for insurance consumers. But further changes to the act, the trade groups wrote in a joint letter to the NAIC last week, are not needed. The Association for Advanced Life Underwriting (AALU), the American Council of Life Insurers (ACLI), the National Association of Independent Life Brokerage Agencies (NAILBA), and the National Association of Insurance and Financial Advisors (NAIFA) wrote in a joint letter that changes addressing compensation disclosure “should remain focused on the issues that gave rise to scrutiny by attorneys general and regulators . . . We do not believe a case can be made that additional disclosure is necessary or appropriate to deal with the issues that have been identified . . .” On December 29, the NAIC, with input from the four trade groups, approved an amendment to the PLMA that:
The
NAIC asked its Executive Committee Task Force on Broker
Activities to consider amendments to the PLMA
that would require further disclosures. The industry
coalition opposes
any additional disclosures.
The task force will make recommendations, if any,
to the NAIC by March 31. As
the amendment to the PLMA stands, the industry groups
emphasized, “We all have an opportunity here to move forward
and address enhanced transparency of producer compensation
disclosure on a thoughtful, uniform basis. For these
reasons, we urge the NAIC not
to add additional disclosures to the amendment
to the PLMA . . .” About NAIFA: Based in Falls Church, Va., NAIFA is comprised of 800 state and local associations representing the business interests of 225,000 members and their employees nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. The NAIFA umbrella includes three specialty organizations: Association for Advanced Life Underwriting (AALU), the Association of Health Insurance Advisors (AHIA) and GAMA International. |
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