In This Issue


close82nd Regular Session Ends May 30th; Guaranty Bill Signed into Law

May 12th at midnight was the deadline for members of the Texas House of Representatives to consider House bills on the Daily or Supplemental Calendar. House bills that did not meet this House deadline could be attached to Senate bills to be considered by the May 25th Senate deadline. With a legislative session that meets in regular session only 140 days in odd-numbered years, most of the 6000+ bills introduced during this Texas Legislative Session will not be passed into law. One that was passed -- Senate Bill 567 -- was a major legislative initiative for NAIFA-Texas.  Unless lawmakers reach an accord on the state budget this week, a special session this summer appears imminent. 


NAIFA-Texas monitored/provided testimony on many bills impacting agents/financial advisors including one to raise consumer protections for annuities: 

NAIFA-Texas Member Senator Tommy Williams

  • Senate Bill 567 by NAIFA-Texas member/Senator Tommy Williams (R-The Woodlands) was introduced early in the Session and passed the Senate and House by the middle of April. SB567, which increases the Texas Guaranty Association coverage for annuity contracts from $100,000 to $250,000, was signed by Governor Perry April 29 and becomes effective on September 1, 2011.

Bills listed below have passed the Texas House and Senate and are on their way to Governor Perry for his signature:

  • House Bill 2277 by Rep. Craig Eiland (D-Galveston). HB2277 relates to the sale, exchange, replacement of life insurance policies and annuities.
  • House Bill 1032 by Rep. John Smithee (R-Amarillo). HB1032 relates to a 20-day "free look" or rescission period for purchasers of annuities.
  • House Bill 2154 by Rep. Craig Eiland (D-Galveston). HB2154 changes/clarifies existing CE requirements. Agents who are not exempt from CE and who sell annuities will have to complete eight hours of continuing education that specifically relate to annuities but will be able to secure the eight hours over the agent's two-year licensing period, instead of having to complete four hours annually.

The following measures are expected to be passed by both chambers and sent to the Governor:

  • Senate Bill 1213 by Senator John Carona (R-Dallas) relates to consumer protections in the purchase of life settlement contracts.  SB1213 has passed the Senate and is in the House Calendars Committee.
  • Senate Bill 622 by Senator Jane Nelson (R-Flower Mound) has passed the Senate. Companion House Bill 300 by Rep. Lois Kolkhorst (R-Brenham) has passed the House. Both SB622 and HB300 relate to the privacy of protected health information and personal information and provides penalties.
  • House Bill 5 by Rep. Lois Kolkhorst (R-Brenham) relates to the Interstate Health Care Compact. HB5 has passed the House and passed out of the Senate Health & Human Services Committee. Senator Robert Nichols (R-Jacksonville) has been authorized as co-sponsor. The Governor and most Republican members of the Legislature, at this point, favor this interstate approach to healthcare over the state exchanges in the new federal healthcare initiative.
  • House Bill 273 by Rep. John Zerwas (R-Richmond) relates to the creation of a study committee for the Interstate Health Care Compact. HB273 has passed the House and is on the Senate intent calendar waiting for consideration by the Senate.  Any Interstate Health Care Compact, intended to allow Texas and other states to have greater flexibility in how to respond to mandates under the new federal health care law, would require Congressional approval, a not-too-likely event given the Democratic controlled U.S. Senate.  
  • House Bill 1951 by Rep. Larry Taylor (R-Friendswood) has passed the House and has been favorably reported as substituted from the Senate Government Organization Committee. HB1951 is the Texas Department of Insurance (TDI) sunset bill which provides for the continuation of the department and its operations.  

Bills monitored and/or opposed by NAIFA-Texas this session include:

  • House Bill 504 by Rep. Joe Menendez (D-San Antonio)/Senate Bill 381 by Senator Jeff Wentworth (R-San Antonio) were similar bills that NAIFA-Texas members testified against. HB504 and SB381 placed onerous, unnecessary burdens on agents in circumstances where owners of life insurance policies and annuity contracts may wish to make partial withdrawals or surrenders. The bill as introduced would have required the involvement of agents and the notarized signatures of contract owners/policyholders during any attempt to make a partial withdrawal and/or surrender.
  • House Bill 636 by Rep. John Zerwas (R-Richmond)/Senate Bill 1510 by Senator Royce West (D-Dallas) would have added a new chapter to the Insurance Code to establish a Health Insurance Connector (Connector) in Texas as the vehicle for a health insurance exchange as required by the federal Patient Protection and Affordable Care Act of 2010. HB636 received a hearing in the House Insurance Committee. NAIFA-Texas health care agents gave testimony from the viewpoint of agents concerning the exchange system, MLR calculations and agent commissions.


paytoplayAll Members Must Complete IFAPAC Directive in Response to new SEC Rule

The new SEC "Pay to Play" Rule went into effect on March 14.  Although this new Rule may affect only a few NAIFA members, the NAIFA National Board, in response to several companies reactions to the Rule, has decided to adjust its IFAPAC fundraising procedures for all NAIFA members. At present, national IFAPAC has suspended sharing funds with states including Texas. 

 

The SEC enacted its new Pay-to-Play Rule to make sure political campaign contributions have no bearing on who receives financial advisory contracts granted by state and local governments.  There has been much confusion about how broadly the SEC will interpret the rule, and a number of RIA companies reacted by telling their agents to stop contributing to state PACs altogether.

 

Sharing your IFAPAC contribution is in the best interests of you and your clients.  Accordingly, it is imperative that you take action to make sure your contribution is shared with NAIFA-Texas PAC (Texas IFAPAC) if your company or broker-dealer permits.  If you are a monthly bank draft contributer, it is imperative that you make your selection immediately, so that your next IFAPAC contribution can be shared with Texas IFAPAC, if permitted by your company or broker-dealer.


ALL NAIFA members must complete the Directive, even if you believe the new Rule does not affect you.   

 

Here's what you must do:

 

  1. Contact your company or broker-dealer compliance office(s) to find out if you can contribute to both our federal and state PAC. 
  2. If you can, go to the Online IFAPAC Directive and - under "please select one of the following options" - check the first box ("Please continue to share my IFAPAC contribution between NAIFA's federal PAC and my NAIFA state association PAC.")  Or, complete the paper Directive and fax it to 703-770-8151. Your Member ID is    and your password is your last name (lowercase).

 

IFAPAC provides individual NAIFA members an opportunity to be actively engaged in the political process and is vital to our advocacy efforts at both the federal and state levels.  Federal and state legislative and regulatory issues, including threats to the tax status of insurance products, could profoundly impact your clients and the way you do business.  Even if you do not plan to contribute to IFAPAC today, you should go ahead and make your selection as soon as possible, so you do not need to worry about the Directive when you are ready to make your contribution.

 

Please contact Nancy Cates at NAIFA-Texas in Austin, telephone 512/716-8791 or e-mail [email protected] if you have any questions or need assistance.  


electedNAIFA-Texas Officers and Trustees to be Elected at Annual Meeting

Local association delegates ("Delegate Council") to the NAIFA-Texas Career Conference & Annual Meeting on Saturday, July 23, 2011 at 2 p.m., will vote to elect a state national committee person, president-elect, secretary/treasurer and four board trustees.  Candidates for office are listed below.


President-Elect: 

 

Doug Massey LUTC, CLU, ChFC, FSS

Doug presently serves on the NAIFA-Texas Board as Secretary/Treasurer.  He is a 24-year NAIFA member, 20-year local board member/officer at NAIFA-San Angelo and longtime attendee of state and national NAIFA conventions and conferences. He is a 2005 LILI graduate and has contributed to IFAPAC at the Diplomat level for 5 years.

 


National Committeeman:

 

Ron Mullen CLU, ChFC

Ron's 44-year membership spans three name changes for this association - TALU, TAIFA and NAIFA-Texas. Ron served as 1997-1998 President of Texas Association of Life Underwriters and prior to that as the 1983-1985 Mayor of Austin. He is a Diplomat contributor to the PAC and often assists with lobby efforts at the Texas Capitol. Ron's knowledge and leadership experience is a unique asset to NAIFA-Texas.



Secretary / Treasurer:

 

Joey Ussery LUTCF, CLU, ChFC and Bachelors Degree

Joey is a 25-year NAIFA member who has served his local NAIFA-Houston association in every office and committee.  He is presently a NAIFA-Texas Trustee where he has served on many state committees, notably 3 years on the state membership committee, and is presently state Membership Chair.  Joey is a 2003 LILI graduate and a 6-year PAC contributor first at the Envoy level and presently at the Diplomat level.


State Trustee:

 

Jason Talley LUTCF and Bachelors Degree 

Jason is currently a NAIFA-Texas Trustee and NAIFA-San Antonio National Committeeperson who has continually served his association for 15 years in various positions.  Presently Jason is Chair of the State Professional Development Committee which oversees the LILI (Leadership in Life Institute) program of which Jason is a year 2000 graduate. He has contributed to IFAPAC for 15 years, currently at the Diplomat level.

Alan Kifer LUTCF, CFP, RFC, CLTC, LTCP, CEP, BCE, CSC, CSS, CTS, CFP, RFP, LTCIS, CPS, CCA, MCCA, CAS and MSM/MBA 
Alan, a 17-year NAIFA member who serves as Assistant Regional Vice-Chair of the IFAPAC National Committee, is a 5-year Capitol level PAC contributor and an 11-year MDRT member.  Presently a member of NAIFA-Houston, he previously served as local president, regional vice-president and state education committee chair in the state of Washington 1994-2002.

Eddie Tate CLU, ChFC, LUTCF and Bachelors Degree 

Eddie is a 22-year NAIFA member, a 10-year NQA member and 1-year MDRT member who has served his local NAIFA-Fort Worth association in various offices for 20 of his membership years.  He is a 2008 LILI graduate, serves on the NAIFA-Texas PAC Board and contributes to PAC at the Envoy level.



Michael Kennedy LUTCF, FIC and MBA 

Michael is a 16-year NAIFA member, 3-year MDRT member, and 2009 LILI graduate. His local association is NAIFA-Corpus Christi where he has served as a local board member for 8 years and held local office for 4 years. Michael has contributed to IFAPAC for 4 years at the Century Club and Statesman levels.

 

 

Installation of officers and trustees will be during the Presidents' Gala Saturday evening.   

Steve Ehlers will become 2011-2012 NAIFA-Texas President.

Cylinda Clark will become Immediate Past President.

 

Trustees whose terms continue are Kirk Haworth, CLU, ChFC, Amarillo; and Lane Boozer, LUTCF, Corinth.  

  

The business meeting is one part of the 3-day NAIFA-Texas Career Conference & Annual Meeting July 21-24, 2011 at the Hilton Houston NASA Clear Lake across from the Johnson Space Center near Houston.  All NAIFA-Texas members are invited and encouraged to attend. Click here for details and registration.

 


expenditures"Tax Expenditures" a Top Target for Both Parties in U.S. Congress

U. S. Congress SealWhen is a tax hike a spending cut? When inside-the-Beltway types can call it "eliminating a tax expenditure." Republicans may be saying that tax increases are off the table for deficit reduction, but they are also saying they want to eliminate some tax deductions, credits, and "gimmicks" in order to lower marginal tax rates for corporations and small businesses. Democrats are calling for a "balanced" approach to deficit reduction, involving 25-50% of deficit reduction coming from tax increases.

 

Many of the largest "tax expenditures" impact the insurance and financial advisors industry:

  • exclusion of inside buildup for life insurance
  • exclusion for retirement contributions
  • exclusion of employer-provided health insurance, cafeteria plans, and group life, disability, and long-term care insurance
  • lower tax rates on dividends and capital gains

 

On May 12 the U. S. House Ways & Means Committee met to hear witnesses who generally supported reducing tax expenditures in exchange for reducing corporate tax rates. However, the Committee also highlighted a letter from 38 associations representing small businesses that cautioned against tax reform that would raise taxes on "pass-through" businesses such as LLCs and S Corporations for the benefit of large corporations.


fiduciaryNAIFA President Terry Headley Weighs in on Fiduciary Standard Debate

Terry Headley

NAIFA President Terry Headley 

National Association of Insurance and Financial Advisors President Terry Headley issued a statement defending the suitability standard of care.  "The suitability standard is robust and heavily enforced.  A suitability standard is rules based, objective and prospective in nature, as opposed to fiduciary, which is process-oriented, subjective and retrospective." said Headley.

His statement came in response to a Consumer Federation of America (CFA) letter written to Congress urging the Securities and Exchange commission (SEC) to proceed swiftly with the implementation of a fiduciary standard for brokers.  The CFA letter also accused NAIFA of making unsubstantiated arguments in opposition to the fiduciary standard.

Headley's response reiterated concerns that the fiduciary duty would increase costs beyond the nearly $9,000 that surveyed NAIFA members currently spend per year on compliance.  Headley cautioned the SEC to not act in haste, stating that NAIFA "support[s] Congress and the SEC for doing the necessary due diligence to ensure a change doesn't result in unintended consequences for investors."

 

Click here to read the CFA letter in its entirety.

 

Click here to read Headley's response in its entirety.


 MLRMLR Provision in Healthcare Law Produces Negative Results

Many health insurance agents are experiencing commissions reduced by 25 to 50% or more since implementation of the medical loss ratio provision in federal law. Some are leaving the business, while others cut staff and client services to survive.

 

A new survey of members of the National Association of Insurance and Financial Advisors shows that the medical loss ratio (MLR) provision of the Patient Protection and Affordable Care Act (PPACA) is causing devastating consequences for health insurance agents and the individuals and small businesses they serve. While Congress enacted the MLR with the aim of ensuring consumers get good value for their premiums, the NAIFA survey shows that in many cases the provision is having the opposite effect.

 

Click here to see the NAIFA-Texas' position relating to another provision in the federal law mandating health insurance exchanges. 


DIAMDisability Insurance Awareness Month; NAIFA Members Have Exclusive Plan

Observation of Disability Insurance Awareness Month is coordinated by the nonprofit Life and Health Insurance Foundation for Education (LIFE) every May to remind Americans of the need to include disability insurance in their financial plans. Disability insurance protects your single most important asset -- the ability to earn a living -- and provides an income if you are unable to work due to illness or injury.

 

Special Opportunity for NAIFA Members

If you are not already protecting your own paycheck with disability insurance, seize the opportunity to do so today. As a NAIFA member, you have access to an exclusive disability insurance program through Kelsey National. The NAIFA Advantage Plus Group Disability Income Insurance Protection Plan is a quality product with excellent features and competitive rates, and it can be tailored to meet your specific needs. Rates will vary based upon your age, monthly benefit desired, and benefit period.

 

The Plan's exclusive group pricing is available only through NAIFA. For additional information, visit www.kelsey.com/naifa or call 800-366-5656, option 3. When calling, be certain to identify yourself as a NAIFA Member.

 

Kelsey National is an Insurance Marketer, Manager, and Third Party Administrator, providing quality group insurance plans and administrative services in all 50 states. Kelsey National has been providing disability insurance plans to NAIFA members since 1997.


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