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.
CYBERSECURITY
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.
SENIOR ISSUES
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.
OTHER ITEMS
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.
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.
“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.”