On July 24, House Ways and Means Committee Chairman Kevin Brady (R-TX) released a listening session framework for “Tax Reform 2.0.” The framework identifies a handful of priorities, including making the individual and small business tax cuts permanent, increasing tax incentives for retirement savings, and furthering incentives for start-up businesses through expanded ability to write off more initial start-up costs.
It is currently anticipated that the House may vote on tax legislation in September (in advance of the mid-term elections), but the Senate is not expected to consider any significant tax legislation.
On July 6, the FRB, FDIC, and OCC jointly released a statement covering various impacts of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which was enacted on May 24. In the statement, the agencies describe positions they will take regarding provisions of the EGRRCPA until they formally amend applicable regulations. Among several topics discussed, we consider the following items to be potentially noteworthy:
As we have been reporting in prior months, the NAIC’s Statutory Accounting Principles (E) Working Group has been evaluating the regulatory treatment of Private Placement Variable Annuities (PPVA) and Private Placement Life Insurance (PPLI). Last month, we submitted a comment letter to the NAIC in an effort to better inform the staff’s deliberations.
In advance of the NAIC’s Summer National Meeting in Boston on August 4, the NAIC staff has released updated materials on this topic, including a summary of the comment letters received and modified recommendations for the Working Group. The NAIC staff noted that it was “most supportive of the comments received from MBSA, as these comments identify the need to consider the quality of the underlying assets held via the “wrapping” insurance product for admittance purposes as well as assessments for RBC.”
The NAIC staff is proposing to adopt or re-expose revisions to SSAP No. 21, paragraph 6. The latest proposed changes to this paragraph
In general, we agree that the net realizable value of ICOLI products should be an admitted asset. We also think this type of disclosure requirement is a good first step toward evaluating whether additional regulation would be prudent (i.e., depending on the overall composition and materiality of the asset classes within such products owned by insurers).
On July 18, the NY Department of Financial Services issued a press release stating that it had issued a final regulation [Insurance Regulation 187] adopting a “best interest” standard for those licensed to sell life insurance and annuity products. The new regulation requires insurers to establish standards and procedures to supervise recommendations by agents and brokers to consumers with respect to life insurance policies and annuity contracts issued in New York State so that any transaction with respect to those policies is in the best interest of the consumer and appropriately addresses the insurance needs and financial objectives of the consumer at the time of the transaction.
The regulation appears to apply to any transaction or recommendation to purchase or replace an annuity contract or in-force policy. As we reported previously, this regulation specifically excludes several products and transactions from its scope. Among the exemptions:
It is not clear to us whether split-dollar arrangements would be subject to the regulation or if they are excluded under one of the above exemptions.
The final rule will become effective on August 1, 2019, and six months from the effective date, insurers and producers shall comply with the requirements for any transaction with respect to life insurance policies.
As a follow up to a previous LRA update, on July 26 the Social Security Administration (SSA) announced a reduction to the projected death records that will be added to the publicly available Limited Access Death Master File (LADMF) on August 4. The SSA announced that 700k additional records will be added, down from an original projection of slightly more than 1 million. To date, approximately 7 million records have been added in 2018.