Last Tuesday morning, 130 NAIFA-Texas members, along with colleagues from the Texas Association of Health Underwriters and the Texas Association of Life and Health Insurers, took to the Capitol to meet with legislators and their staff regarding issues of importance to our industry.

In meetings, NAIFA-Texas members educated legislators and their staff on everything from 403(b) and 457(b) retirement plans for Texas public school employees, to health insurance/PPACA mandates, to the long-term viability of the Texas Windstorm Insurance Association. They also emphasized maintaining the current protections that shelter life insurance policies and annuities from a demand in bankruptcy, garnishment, attachment, execution or seizure; and preserving a strong Texas Guaranty Association to ensure continued policy coverage and benefits if an insurance company were to become insolvent and be liquidated.

With roughly 1 of every 4 members of the 83rd Texas Legislature in their freshman term, there was ample opportunity to forge new relationships. These ties were strengthened as association members escorted their representatives to the Sheraton Austin Hotel for the Legislative Appreciation Luncheon. Texas Attorney General Greg Abbott delivered a keynote address at the noon hour to a packed room, detailing his efforts to protect Texas from federal overreach and commending our members on their work to protect the financial security of families across Texas.

From top left, NAIFA-San Antonio members Ron Botello, Elizabeth Valenti, and Michael Aguirre spent time together at the Capitol; NAIFA-Texas President Doug Massey and Attorney General Abbott posed following Abbott's luncheon address; Senator Donna Campbell and NAIFA-Texas Government Relations Chair Jason Talley enjoyed lunch together; Corpus Christi members met with Rep. Abel Herrero (center, blue shirt); and Rep. Myra Crownover met with NAIFA-Texas Secretary/Treasurer Lane Boozer. MORE PICTURES FROM LEGISLATIVE DAY.

While the year has started out quietly -- never a bad thing -- our members have laid the groundwork for meaningful relationships and stand ready to call upon legislators and their staff at the first filing of harmful legislation.

Dee Carter of NAIFA-West Texas was elected National Committeeman.

 
The narrow defeat of the by-laws amendment dictated that all four of the trustee terms set to expire in June 2013 would be filled. With only four candidates running, Hollie Gandy, CSA, CSLTC, SMS; Michael Kennedy, MBA, LUTCF, FIC; Joseph Orr II, LUTCF; and Douglas Richards, JD, CLU, ChFC were elected to the 2013-2014 Board of Trustees with a vote by acclamation. Additionally, Gandy was elected to serve the remaining 5 months of a currently vacant trustee position. In a contested race for National Committeeman, Dee Carter, CLU, ChFC, CSA, RFC edged out Stephen Ehlers, LUTCF. Jason Talley, LUTCF was elected Secretary/Treasurer and Lane Boozer, LUTCF was elected President-Elect, both without opposition.

Past NAIFA President Tom Currey swore in the NAIFA-Texas 2013-2014 Board of Trustees Tuesday evening. Their terms begin July 1, 2013.

Tax reform remains a top Congressional priority. The National Taxpayer Advocate's Annual Report to Congress, issued on January 9, points out it takes U.S. taxpayers more than 6.1 billion hours to complete tax filings and costs taxpayers $168 billion to comply with the code. In addition to a discussion about the complexity of the tax code and the trade-offs between tax rates and tax breaks that tax reform will require, the report recommends that Members of Congress take several steps, including: Apply a "zero-based budgeting" approach to comprehensive tax reform that starts out with the assumption that all tax benefits will be eliminated and then adds a benefit back only if Members conclude that, on balance, the public policy benefits of providing that benefit through the tax code outweigh the complexity it imposes on taxpayers.

The below is an opinion piece originally published in news-press.com from NAIFA CEO Dr. Susan Waters, which strengthens the need for our call to arms:

NAIFA CEO Dr. Waters

It's happening again. Every few months, it seems, the President and Republicans and Democrats in Congress come to loggerheads over the ballooning federal debt. We saw it this past year as they struggled to agree on a national budget and raise the federal debt ceiling. We see it right now as they wrestle to head off the $7 trillion in tax hikes and spending cuts that would likely propel our economy off the so-called fiscal cliff. Just as death and taxes are among life's certainties, we can be sure that 2013 will bring even more political wrangling.

The amount of money that the government brings in and the amount it spends have gotten so out of whack that most political observers expect Congress to do a major overhaul of the federal tax code this year. It will be a painful process and it's likely to affect every American.

Desperation in Washington has reached the point that those of us in the life insurance business worry that tax reform could even affect the products we use to help 75 million American families secure their financial futures.

Today, if you own a life insurance policy, any cash value that builds up over time in that product is tax-deferred. The policy's death benefit, which will provide financially for your family in the unfortunate event that you are unable to, is not taxed.

It's been this way since the very first internal revenue act passed in 1913. Lawmakers then and since have seen the value of life insurance and have realized that taxing products that provide for the financial health of so many Americans would do more harm than good.

Life insurance products account for 20 percent of long-term savings in the United States. What's more, according to SecureFamily.org, life insurance companies pay out over $1.5 billion every day. The life insurance industry directly supports 2.5 million American jobs.

While the advantages to those who own life insurance are apparent, society as a whole also benefits. If tax reform makes life insurance less attractive, more families will certainly look to government entitlement programs to provide for them in difficult times.

These facts serve as the foundation for 100 years of regulation protecting the tax status of insurance products. Yet, the tax reform looming in 2013 could put it all in jeopardy. Lawmakers from both parties have indicated that every potential source of revenue will be on the table.

The good news is that our leaders in Washington have those 100 years of precedent to draw upon. As the debate heats up, we hope any proposal that would change the tax status of insurance products will have a very brief shelf life.

 
Congress and President Obama should quickly realize, just as their predecessors have since 1913, that the overwhelming good life insurance does for consumers and society far outweighs any short-term gain that may come from taxing these products.

NAIFA-Great Southwest member Scott Kissinger presented the Bruce Murray Award to Stephen Ehlers (left) during Tuesday evening's program.

On the occasion of the NAIFA-Texas Conference and Annual Business Meeting, the association took the time to recognize two outstanding leaders for their service.

NAIFA-Texas Immediate Past President Stephen Ehlers, LUTCF was the recipient of this year's NAIFA-Great Southwest Bruce Murray Tall Texan Award. The Bruce Murray Tall Texan Award recipient is determined based upon the demonstration of the following criteria: political involvement, general association involvement, community service, education, and membership.

Stephen has been a member of NAIFA since the day he joined his father's business and has followed in the footsteps of the late Robert Ehlers in demonstrating passion for the industry, his clients, and the NAIFA federation.  Ehlers carries on the Parade of States Flag Ceremony tradition started by his father at each NAIFA National conference, which will celebrate its 31st anniversary this year in our very own Lone Star State. Ehlers contributes to IFAPAC at the Diplomat level. He is also a 2002 Leadership in Life Institute (LILI) graduate and has applied those leadership principles throughout his service at the state and local level. Stephen truly embodies the definition of a servant leader, and we commend him on this oustanding accomplishment.  

Jason Talley, left, was named "Outstanding Trustee of the Year."

Jason Talley, LUTCF was named "Outstanding Trustee of the Year," an honor bestowed upon one NAIFA-Texas trustee each year by the President for exemplary service. Talley serves as a member of the NAIFA-Texas executive committee. He is a 17-year member, 2000 LILI graduate and currently serves as the NAIFA-Texas Government Relations and Membership Chairs. He contributes to IFAPAC at the Diplomat level. Talley has been elected Secretary/Treasurer for the 2013-2014 year.

For the second straight year, Texas is #1 in total contributions, raising a total of $187,276 in 2012!

Texas IFAPAC Chair Roland Barrera

The state finished the year third in number of contributors, with 667 members contributing to IFAPAC across the state of Texas. Thank you to each and every member that stepped up in 2012 to "write that proper check" and contribute to that success.

At the NAIFA-Texas Annual Business Meeting on Tuesday, IFAPAC Chair Roland Barrera set the bar even higher in announcing the state's goals for 2013: $194,000 in total contributions and 711 contributors. He called on those present in the meeting to step up their commitment to IFAPAC in 2013 and received an overwhelming response, raising over $17,000 from 34 members. Let's keep the momentum going: make your own IFAPAC contribution today! 

NAIFA-Texas is seven leaders stronger! Congratulations to the LILI Class of 2013: Christy Brown, CFP, NAIFA-Houston; Eric Campbell, CLU, ChFC, CLF, CLTC, NAIFA-Austin; Kyle Lindner, NAIFA-Houston; Carol Metteauer, NAIFA-Greater East Texas; Brett Ruddell, LUTCF, NAIFA-Fort Worth; Ericka Upton, NAIFA-Dallas; and Elizabeth Valenti, NAIFA-San Antonio.

From left, Metteauer, Campbell, Brown, Valenti, Lindner, Upton, and Ruddell.

The LILI Class held its final day-long class session January 21 and graduated its class later that evening. NAIFA-Texas President Doug Massey and President-Elect Joey Ussery were on hand to deliver the commencement address and assist in the presentation of graduation certificates.

The mission of LILI is to develop leaders by fostering personal growth, enhancing business practices, and developing skills necessary for effective leadership. The NAIFA-Texas LILI Class of 2014 will begin August 19 at the NAIFA-TX offices in Austin. More information will be available soon to prospective candidates.

The winners of the NAIFA-Texas Hold 'Em and Hook 'Em membership contests were announced at the NAIFA-Texas Business Session on Tuesday, January 22.

Six local associations won $400 for member retention and for new member recruitment.

• Small size category -- NAIFA- Wichita Falls in retention and NAIFA-Mainland for new members.
• Medium size category -- NAIFA-Amarillo Area in retention and NAIFA-El Paso in new members.
• Large size category -- NAIFA-San Antonio in retention and NAIFA-Houston in new members.

Don't forget that every member who recruits a new member into NAIFA-Texas in the 2012-2013 year will be entered into a drawing to receive $250 (one "ticket" for each member recruited). Additionally, the NAIFA-Texas member who has recruited the most members in the 2012-2013 year will be awarded $500. These contests end June 30, 2013.

A new rule recently approved by the SEC will require broker-dealers to make reasonable efforts to locate security holders with which the broker-dealer has lost contact. The new rule, required by the Dodd Frank law, extends the requirements of SEC Rule 17Ad-17 -- which previously had applied to recordkeeping transfer agents -- to cover all broker-dealers as well. The new rule will require broker-dealers to search for account holders who the b/d has lost contact with, such as in situations where outgoing mail has been returned to the b/d as "undeliverable" or where checks sent to a security holder have not been cashed for a significant period of time.

The new rule applies to broker-dealers and does not specifically reference or impose any duties/responsibilities on registered representatives of broker-dealers. Since most NAIFA members who market and sell securities are licensed as registered representatives of a broker-dealer, the rule does not directly impose any new duties and responsibilities on these members with respect to their securities activities, although the possibility does exist that a broker-dealer may seek to involve their registered reps in searching for "lost" security holders.

The new rule is currently being reviewed by the federal Office of Management and Budget. Once that review is completed the rule will be published in the Federal Register, with an effective date of 60 days following publication and the date for required compliance being one year after publication. For more information read SEC release 2012-277.

Many agent E&O Insurance providers attempt to limit their exposure to claims arising out of the insolvency of a product provider. This is typically handled through an insolvency exclusion on the agent E&O policy that indicates the policy will not apply to claims arising out of the insolvency of an insurance company, a financial institution, a specific product or a specific plan. The teminology will vary; however, most E&O providers are simply not interested in being the default insurer of an insolvent company or product through E&O claims made against the agents it insures. At the same time, some insurers are willing to provide some level of coverage to the agent for insolvency when the agent is placing coverage with companies or products it deems secure. They are willing to "carve back" the exclusion by adding language like "this exclusion shall not apply to any insurer that was rated A- or better by AM Best at the time of the insured's acts." Again, the language will vary but the insurer is attempting to give back some coverage within the insolvency exclusion.

Risk Management Tip:

In order to minimize your risk to uncovered claims, be sure to evaluate the carriers and products in which you are placing business. Perform appropriate due diligence by researching the companies with whom you do business. AM Best provides one tool to evaluate insurance companies, but don't stop there. Seek out company financials and stay current with insurance and financial news. Take time to review your E&O policy. Does your policy have an insolvency exclusion or any other exclusions that deal with a failed product or company? Be familiar with these exclusions and understand how they impact your business. When evaluating a new E&O policy, look for a "carve back" to the insolvency exclusion that may provide you with additional security when placing business. By understanding your E&O coverage and minimizing your exposure to insolvency claims, you could save yourself time, money and emotional distress.  

For more information about CalSurance and/or to apply online, visit www.naifaeo.com or call 888-833-2304.

Additionally, save 10% on your premium by completing a new online risk management course available exclusively to NAIFA members. The course is free, or pay a nominal fee to receive CE credit as well. For more information, visit naifamember.smartpros.com.

As a vehicle intended to manage the financial risk of death and the perils of old age, life insurance is unique. With no known exception, our legislators and regulators support the critical role life insurance plays in the financial security of Americans. Full story.

Life insurance industry lawyers and lobbyists are voicing relief that Congress has finally determined long-term estate and gift tax policy, but are now girding for the coming battles over the tax status of a number of industry products. Full story.

The House drew the nation back from the fiscal cliff when it voted to approve compromise legislation that, amongst other provisions, makes the current estate tax policy permanent, with one minor change. Full story.