NAIFA State Advocacy Amidst COVID-19: A Glimpse into the Unknown
It’s hard to believe that only a couple of weeks ago, NAIFA State Chapters were moving full steam ahead on advocacy issues. From advocating against a stop-loss bill in New Jersey, to pushing continuing education credit for association membership bills in Missouri, NAIFA was at the forefront of their state legislatures fighting for a successful future for financial advisors and consumers.
Fast forward to today and everything has changed. The industry aside, people’s lives have been turned upside down as people try to balance concerns about the spread of the virus with trying to function in complete isolation. For those who are fortunate enough to work remotely, they have the burden of needing to concentrate on day-to-day work tasks while trying to ignore the nagging thoughts that come with a worldwide pandemic.
NAIFA has watched with pride, as members rise to the occasion and use their professional expertise to serve the greater good during this time of uncertainty. NAIFA staff has also been highly involved in coordinating with federal agencies to produce guidance to help prevent customers from being scammed as well as other COVID-19 resources. In addition, NAIFA is working with advocacy partners on a model for state regulators to use for temporary, emergency producer licenses since applicants for licenses are unable to sit for an exam or be fingerprinted due to shelter in place orders.
The legislative issues that were so pressing to NAIFA a short while ago are still important but have understandably taken a backseat to efforts to deal with the coronavirus. At least 25 state legislatures have suspended their sessions due to the health concerns of large gatherings. Once legislative operations resume, lawmakers will face a wave of new issues since the impact of the virus will have hard ramifications on state budgets. There is no good answer to what this means for pending NAIFA-related measures but here are some predictions from NAIFA’s lobbyists on the ground who remain plugged into the scenes that are playing out across state capitals.
NAIC ANNUITY SUITABILTY MODEL
A key issue for NAIFA members is our support for the adoption by the states of recent amendments to the NAIC Suitability in Annuity Transactions model. A handful of states, including Arizona, Iowa and Nevada, were actively considering these amendments before the coronavirus spread. In Arizona, legislative leadership is hopeful that they will be able to return to the capital at some point in the coming months, according to NAIFA-AZ lobbyist Mike Low, however, it is uncertain that if they do, they will bring up the annuity transaction bill for final passage. NAIFA-AZ fought hard to advance this bill through private meetings with legislators and grassroots activity. In Iowa, the Insurance Division remains working on COVID-19 and other issues simultaneously, including the annuity suitability measure.
STATE RUN RETIREMENT PLANS
Few, if any, NAIFA state chapters are strangers to the Secure Choice Retirement Savings Program – or some version of it. Advocates for this have spent the past couple of years encouraging state lawmakers to pass a state-facilitated retirement program. While NAIFA agrees more needs be done to help small business workers save for retirement, the Secure Choice plan carries risks for workers and financial burdens for taxpayers. NAIFA state chapters were actively opposing Secure Choice proposals in several states before the disruptions caused by the COVID-19 virus.
The coronavirus impact on Secure Choice measures is unknown. Some advocates may use the crisis as showing the need for a state-run plan, however, implementing and operating these plans will cost the states significant sums of money at a time when states are almost certainly going to incur major expenses due to COVID-19. It therefore seems unlikely that states will be eager to enact new laws that will push state budgets further into the red.
- In Colorado, a Secure Choice bill was filed on March 10. NAIFA-CO was ahead of the issue, writing letters, op-eds and meeting with lawmakers. Due to the new economic reality, NAIFA-CO thinks it is unlikely the bill will run this year, or anytime soon. “Legislative council staff and the Governor’s Office of State Planning and Budgeting have provided a pretty grim picture of the difficult decisions the committee will face in the next few weeks as they attempt to finalize the budget during the legislative break,” said NAIFA-CO Executive Director Carl Larson.
- In North Carolina, a legislative study committee was tasked to evaluate the need for a state-run retirement plan in 2020. NAIFA-NC was active in communicating concerns and provided compelling research to the committee chair aimed to deter them from recommending such a plan to the full legislature. Before coronavirus, the committee was already vocal with desire to push back its deadline to make a recommendation until December. If anything, NAIFA-NC said the issue would not be back until the 2021 session.
- In Maine, the combination of democratic control of state government and a surplus of funds provided the state-run retirement bill with strong momentum in 2020. NAIFA-ME was active in opposition but lobbyist, Dan Bernier, says that because of coronavirus, new tax revenue will decline so there likely will no longer be state resources available to fund such a program.
Many states were in the process of implementing the NAIC insurance-specific data security model. Some states can do this by regulation, others need to do it by law. A potential outcome of the coronavirus, predicted by Gary Sanders, vice president at NAIFA, is that once all the dust has settled, it is likely that more companies will be telecommuting, and more work done electronically. This could lead more states to feel the need to have strong cybersecurity and data protection requirements in place. In addition, adoption of the NAIC model does not appear to have much of a fiscal impact on the state budget, so cyber activity will likely continue.
CE CREDIT FOR ASSOCIATION MEMBERSHIP
Laws or regulations that permit financial advisors to receive some continuing education credit for their active membership and participation in a professional agent trade association has been a longtime signature issue for NAIFA. Many state chapters had made serious headway on these measures in 2020, unfortunately the new reality will change the momentum of these initiatives.
- NAIFA-KS was optimistic about a bill that would allow 24 hours of continuing education credits every two years. Currently, the state allows only 12 hours every two years unless an individual is licensed for health and life and property and casualty (two separate licenses). Due to coronavirus, the Kansas legislature adjourned two weeks ahead of schedule. They may return sometime before May 21; however, they are not compelled to return since the budget and all priority bills have been completed.
- In Missouri, the continuing education bill was “moving along just fine,” according to NAIFA-MO, however, will likely not see the finish line this year, due to COVID-19. The legislature at this point is still struggling to determine how it will even complete its budget and necessary revenue generating bills.
- NAIFA-MI’s progress on a bill which would allow up to four credits of continuing education for insurance producers for participation in their professional insurance association has stalled due to the pandemic.
- NAIFA-NY remains optimistic that session will return in June, ready to tackle non-budget issues, including the chapter’s efforts to secure continuing education credits for NAIFA membership.
- In Wisconsin, NAIFA-WI is hopeful that a bill it championed related to elder abuse will pass if the state’s Senate is able to reconvene and complete its session. The bill, which would allow financial advisers to delay suspicious transactions, is only waiting on the formality of a vote.
- In 2020, NAIFA-MI is advocating for passage of a bill that would authorize broker-dealers and investment advisors to take certain actions, including placing a temporary hold on the disbursement of funds, to protect senior and vulnerable a specified-adults from financial exploitation. It remains unclear what will happen to this measure.
IN FRONT OF THE ISSUES
Many chapters have used their position as leaders in the industry to help government officials navigate through the coronavirus crisis. In New York, the epicenter of the virus, NAIFA-NY has been interacting with the Division of Financial Services, the governor’s office and others to remain abreast of changes coming in the form of emergency orders and regulations. The chapter was also instrumental in having continuing education obligations deferred.
In Colorado, NAIFA-CO is leading two advisory councils at the Department of Regulatory Agencies. Carl Larson, the chapter’s executive director and lobbyist, is serving as chair of the Producers Advisory Council within the Division of Insurance. NAIFA National Committeeperson Shelley Rowe, is serving as the vice chair. In addition, NAIFA is participating on the Industry Advisory Council at the Division of Securities. “Both divisions have been very responsive and accommodating through this challenging period,” Larson said.
- NAIFA-CA is acknowledging that everything is up in the air now. The legislature is out until April 13; however, it is expected they will push back that date until May 1 at the earliest. It is also a possibility the legislature may only come back to do the budget and may try to pass it with as few people as possible.
Shari McHugh, NAIFA-CA’s lobbyist, said she is still working as if they are coming back and moving bills since there is no assurances that non-essential bills won’t move. California currently has two major pieces of legislation that concern NAIFA members. One bill would restrict the use of HIV status in life and disability underwriting. The other bill would impose the Long-Term Care suitability requirements on insurers and agents selling life/LTC hybrid products.
- In Louisiana, legislative session isn’t expected to resume until May 1. Once they do, it is doubtful that any bills will be considered other than money and bond bills.
- In New Hampshire, all legislative activity has been suspended until May 6. The state’s legislative leadership is still uncertain on how the current crisis will impact pending bills.
- Earlier this year, NAIFA-ME had engaged membership in grassroots outreach for a bill that would eliminate the state’s premium tax on annuities. The bill was making progress yet will likely stall due to the new legislative landscape.
- NAIFA-OK has been in contact with state legislators and was told that once session resumes, a priority bill to pass would be SB 1642. The bill is a fix to a producer licensing issue that would change Oklahoma to a pre-appointment state. The bill is one step away from being complete and lawmakers have expressed desire to get it done before open enrollment period begins. NAIFA-OK’s lobbyist Seth Rott has also said that moving surprise billing this session is still paramount to lawmakers.
- NAIFA-CT had a priority bill that would provide that the cash surrender value of life insurance policies shall also be exempt from a judgment creditor. The bill did not have a public hearing because the legislature prematurely closed just before the day of the hearing due to the coronavirus. Josh Hughes, NAIFA-CT’s lobbyist, said it is unlikely to be resurrected because it never had a vote of support from the Judiciary Committee, and there was no public hearing which all bills must have to be considered.
The other priority bill for NAIFA members in Connecticut would allow a state income tax deduction for long-term care premiums. The bill was voted out of committee but has a fiscal note and would be controversial for that reason.
- NAIFA-MN testified only a few weeks ago in favor of a medical records bill. The bill had one more stop before reaching the Senate floor. Ironically, the bill was scheduled for a hearing on the very day the legislature suspended normal operations. In the House, the companion was on track and awaiting its first hearing when operations were suspended. NAIFA-MN lobbyist Chris DeLaForest, said the fate of the bill is unknown. “The legislature has an adjournment date of May 18th this year, which cannot be changed as it is mandated by the state’s constitution,” DeLaForest said. “Thus, any unfinished business would have to be the subject of a special session or await the 2021 legislature.”
- NAIFA-NE is patiently awaiting the outcome of three priority bills. There were 16 legislative days remaining; however, the Speaker suspended the session until further notice. These bills include a bill to exempt 50 percent of the military retirement pay from Nebraska income tax and two other bills related to the Nebraska Educational Savings Plan Trust.
“We don’t think anything is going to happen with any of these bills this year,” said Joe Pittman, the chapter’s executive vice president. “The legislature was suspended with just 16 days remaining – they will likely reconvene at some point just to focus on passing a budget and maybe a few priority bills.”
- NAIFA-MI has been active on implementation of the state’ auto-fault law set to take effect on July 1, 2020. According to Kay Harless, NAIFA-MI’s executive director, progress on this will be slowed down as the focus will turn to COVID-19 and tighter budgets. “On top of that, we’re not even sure when the legislature will return to a full-time schedule,” Harless said.