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| From the CEO | |
Dear ,
 Welcome to 2012! We are pleased to count you among our members for this year -- a year that will surely be filled with successes and challenges alike. From Texas redistricting to the November elections, the ongoing MLR battle and beyond, know that your PAC dollars are at work for you in Austin and Washington.
In addition to our advocacy efforts, we can assist your professional development - through CE courses, the LILI program, free online business tools, informal mentoring, and more.
This newsletter will serve as a digest of important issues and a guide to what to watch for in the months ahead. As always, we strive to provide you with timely information that impacts your business; for instant access, be sure to check the NAIFA-Texas website daily or subscribe to updates via Facebook or Twitter.
I look forward to connecting with many of you at your local meetings this year and/or at the state conference in July. And of course, do not hesitate to call or email me at any time.
Sincerely,
Des M. Taylor
NAIFA-Texas CEO/CLO
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| U.S. Supreme Court Convenes to Consider Texas District Maps | |
  The U.S. Supreme Court convened January 9 to determine which maps Texas must use for this year's elections. Congressional and legislative maps need to be in place before the primaries, now scheduled for April 3.
New Texas House and Senate, and U.S. Congressional district lines were drawn during the 82nd Texas Legislature, a task which is done every 10 years to adjust for changes to population composition. Several suits were filed over boundaries of some of the newly drawn districts, citing racially and ethnically discriminatory practices. Subsequently, new maps were drawn by a federal court in San Antonio. On December 9, however, the U.S. Supreme Court "stayed" the interim maps, meaning that there are currently no legally enforceable district lines for the state races. As a result, the Democratic and Republican parties were forced to move the primary election date from March 6 to April 3.
As candidates await Court decisions, their campaigns are busy raising money. Texas IFAPAC is fielding a large number of requests for funds and, along with candidates and incumbent officeholders, is eager to have a resolution of the chaotic situation presented by redistricting issues.
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| TDI Commissioner Asks for Phase-in of MLR Provisions |
Texas new Insurance Commissioner Eleanor Kitzman has followed the lead of her predecessor Mike Geeslin in asking the Department of Health and Human Services (HHS) for a waiver from a provision in the new federal healthcare law that requires insurers to spend no more than 20 percent of customers' premiums on administrative costs and profits including commissions paid agents.
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TDI Commissioner Eleanor Kitzman |
Specifically, Kitzman is asking that the requirement be phased in for companies that sell policies to individuals and small companies, with insurers having to spend 71 percent of premiums on medical care and quality improvement efforts in 2011. That would become 74 percent in 2012 and 77 percent in 2013 before hitting the 80 percent mark in 2014. Under the law, insurers that don't meet the MLR requirement will have to pay rebates to their customers.
Some companies are citing requirements of the new law as reasons to lower agent commissions which in turn is causing some producers to exit the market. "Agents are critical to promoting a competitive market and ensuring that consumers obtain the coverage that best suits their needs. It is unfortunate that consumers are being put in this no-win situation and are being forced to navigate an overly and unnecessarily complex system without the benefit of expert, trusted advisors," stated Kitzman.
Kitzman identified the waiver as "the best short-term remedy to maintain stability" in the market but acknowledged that a permanent solution still must be found.
NAIFA-Texas President Stephen Ehlers, LUTCF said that the request for a waiver/ phase-in of the new law is a step in the right direction but does not go far enough to insure that agents will be fairly compensated in an increasingly complex health insurance market.
The waiver request was met with opposition from some Texas lawmakers, with State Rep. Lon Burnam and 30 other state representatives urging Kitzman to withdraw the MLR waiver request. They say the request would cost Texas policy holders an estimated $260 million.
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| Texas Court OKs Business Tax; Reform Likely Next Session | |
 The Texas Supreme Court ruled November 28 that the state's primary business tax, commonly known as the franchise or business margins tax, does not violate the state constitution, setting the stage for lawmakers next session to reform the tax which pays for schools, prisons and other basic functions.
The tax generates more than $4 billion a year, a sum far less than what lawmakers had anticipated when they overhauled the tax in the wake of a 2005 Supreme Court ruling that deemed the State's school finance system unconstitutional.
Attempts to broaden and/or "fix" the tax in the 83rd Session in 2013 will be monitored closely by NAIFA-Texas to insure that agents and their clients interests are protected.
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Watson to Serve as 2012 NAIFA-Texas PAC Board Chair |
Eager to get the 2012 NAIFA-Texas PAC year off to a great start, Chair Carolyn Watson from Abilene met with NAIFA-Texas CEO/CLO Des Taylor and Director of Government Relations/Communications Nancy Cates during the first week of January to discuss upcoming PAC events.
Carolyn and the PAC Executive Committee - Eddie Tate from North Richland Hills, Robin Johnston from Austin, Les Littleton from Nacogdoches and new Vice-Chair Larry Ynman from San Antonio - will be leading PAC fundraising efforts and approving contribution requests for candidates in statewide races as well as the 31 Texas Senators and 151 Texas House of Representatives members up for election in 2012.
The total amount of PAC contributions collected in Texas during 2010 -- $194,279 -- led the nation! Also, Texas leads nationally in the number of PAC contributors -- 694.
The PAC Board will be setting the 2012 statewide contribution goal by February first. Local Association goals for PAC contributions are due to the NAIFA-Texas office by January 20th.
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NAIFA-Texas PAC Board (L-R): Carolyn Watson, Eddie Tate, Robin Johnston, Les Littleton, and Larry Ynman |
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| Renew Your E&O With CalSurance | |
CalSurance is NAIFA's only endorsed Professional Liability Insurance Program.
 If it is time for you to renew, the CalSurance program brings new and improved policy coverages, added services, online applications, a fresh underwriting perspective and an expanded marketing outreach program to all NAIFA members.
And coming in early 2012: a new online risk management course that can save you 10% on your policy and provide you with 2 hours of CE credit!
Visit naifaeo.com for more information, and/or contact the NAIFA team at CalSurance Associates (888) 833-2304 for additional details.
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| SEC Fiduciary Rule: Will Brokers Paid Commissions Get Break? | |
Brokers who work with individual investors will likely be able to continue charging commissions and pushing in-house products under a rule being written by the U.S. Securities and Exchange Commission (SEC).
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SEC Chairman Mary Schapiro |
SEC Chairman Mary Schapiro said the rule-in-progress respects business differences between investment advisers, who already treat customers under a fiduciary duty that puts clients' best interests first, and broker-dealers who may soon have to do the same. The Dodd-Frank Act charged the SEC with studying how retail investors are treated and raising the standard for brokers if necessary.
"We want to be business-model neutral," Schapiro said in an interview, responding to industry concerns that the rule might give advantages to one group over another.
Dodd-Frank permits the SEC's rule to protect clients without imposing a blanket ban on certain brokerage activities, Schapiro said. "The statute makes it clear that principal-trading and proprietary products are OK, that charging brokerage commissions is OK," she said.
Shapiro said that agency economists are still analyzing the costs and benefits of moving from a suitability standard to a new standard. While the SEC originally planned to issue the regulation in 2011, the rule is not yet complete.
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| NAIFA: Inside Buildup Remains High Priority Issue |
 A premise of inside Washington reality: Just because there is no "visible activity" doesn't mean work isn't ongoing on key issues.
This is no better illustrated than by the current status of whether to change tax rules governing life insurance and annuity cash values, or inside buildup.
There is growing, and bipartisan, talk about tackling fundamental tax reform. President Obama called on Congress to "rethink" the tax code as recently as December 6, in a key speech in Kansas.
One of the key "umbrella" suggestions embraced by virtually all lawmakers is that a reformed tax code must have a broadened tax base and lowered tax rates. That means eliminating or cutting back on special tax rules-variously called "tax expenditures," "loopholes," "special interest provisions," and many other names.
While the policy underpinning current tax rules governing life insurance and inside buildup is undeniably correct, the rules themselves too frequently get lumped in with the "special interest/loophole/tax expenditure" characterizations.
NAIFA, in conjunction with life insurance companies and affected businesses and consumers, is waging an ongoing fight to overcome this misperception, and to take life insurance and annuity cash value tax rules out of the group of tax rules targeted by those seeking to broaden the tax base in order to lower tax rates.
The effort works on two important levels. NAIFA representatives in Washington, DC carry the message to Capitol Hill every day. But even more crucial are the at-home constituent contacts made on an ongoing basis by NAIFA members.
Currently, there are no specific proposals pending that would change current law tax rules governing life insurance and annuities. At least in part that is a direct result of the ongoing effort NAIFA members, supported by their Washington representatives, are making.
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| 2011-2012 NAIFA-Texas Sponsors | |
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