.gif )
|
AEGON Issues Insurance Regulatory Reform /Optional Federal Charter Insurance companies incur considerable costs to comply with over 50 different insurance regulators. In addition, companies and agents must obtain multiple and duplicative licenses to do business in more than one state – a costly and administratively burdensome requirement. Differing and inconsistent state regulation impairs our ability to bring new products to market in a timely fashion. The deficiencies in the current regulatory system pose a significant barrier to our ability to compete effectively with other providers of investment and retirement savings products, such as banks and securities firm. Both insurance companies and consumers are hurt as a result. AEGON USA supports regulatory reform on both the state and federal level, including efforts to improve the state regulatory system and the enactment of an optional federal charter. (Read more…) Housing Bill May Restrict Insurance Sales In August, Congress approved legislation that could significantly restrict the ability of insurers to sell their products through banks and other financial institutions that originate a home equity conversion mortgage (HECM). A home equity conversion mortgage (HECM) is a Federal Housing Administration (FHA) - insured reverse mortgage. A reverse mortgage is a loan secured by a home that does not have to be repaid until the borrower dies, sells the home, or permanently moves out of the home. A borrower has several options for taking the reverse proceeds of the mortgage, including a lump sum, monthly payments, or a credit line. The HECM sales process has become the subject of Congressional scrutiny because of a few high-profile situations in which reverse mortgage borrowers were convinced to use their loan proceeds to purchase unsuitable financial products, primarily deferred annuities with high surrender charges. In addition, concerns have been raised about consumers paying multiple fees (i.e., fees for the reverse mortgage plus those associated with the sale of a financial product), and that the cost of the annuity in this context is such that the consumer will not benefit regardless of expected/actual longevity. In an effort to address this perceived problem, Congress adopted the Housing and Economic Recovery Act of 2008 (HERA). In addition to prohibiting the tying of a HECM to another financial product, Section 2122(n) of HERA places restrictions on a mortgage originator's ability to sell or refer the borrower to other financial or insurance products. The newly enacted law did not take into account suitability rules and other statutory and industry safeguards that protect against such abuses. The impact of the new provisions governing the origination of HECMs may be direct (e.g., for insurers that originate HECMs), or indirect (e.g., through changes to distribution channels). The extent of those restrictions will depend on how the Department of Housing and Urban Development (HUD) interprets this legislative provision in its implementing regulations. HUD has asked the public for comments on this issue and we are working with other insurers and our trade associations in an effort to ensure that current business practices will not be impacted. Retirement Security/Pensions Americans are not saving enough for retirement. Traditionally, retirement security has been based on the three critical elements: Social Security, employer-sponsored retirement plans and individual savings. However, over the last few years, each of these elements has become less certain. Social Security faces a long-term solvency concerns as scheduled benefit payments are soon expected to exceed funding through payroll taxes. Employer-sponsored retirement plans cover only about 50% of workers, with coverage especially low among small employers and lower-income workers. According to the Department of Labor, in 2001 the personal savings rate hit over a 60-year low of 1.7%.
Millions of Americans will be unable to maintain an adequate standard of living throughout their retirement, largely because – regardless of how much they’ve saved – they will live longer and spend more time in retirement. The biggest financial risk they face is not knowing how long they will live and, therefore, how long their resources will have to last and provide a steady income. At the same time Social Security is expected to provide less of what people need to live, while fewer and fewer are covered by traditional pensions that provide a guaranteed lifetime income. AEGON USA supports proposals to provide tax incentives to encourage Americans to manage their savings by investing in life annuities that provide a steady income stream for life. (Read more…) Mutual Fund Issues There have been several reported incidences of abuse in the securities markets in the last few years. In an effort to address these abuses, several bills and Securities & Exchange Commission regulations have been proposed that would significantly reform the regulation of mutual funds to remove the opportunity for abuses. Among the proposed reforms is a prohibition on trading after 4:00 p.m., increased disclosure and enforcement to avoid market-timing, increased independence of mutual fund Board of Directors, and improved disclosure of the fees and charges incurred by consumers in connection with their mutual fund investments. AEGON USA supports reasonable reform in these areas, and is working to ensure that proposed reforms do not unduly restrict valid transactions or increase the cost of investments in mutual funds. PrivacySeveral federal and state bills has been enacted or proposed have been introduced in the name of privacy, including those to establish a uniform national privacy standard, combat identity theft, impose restrictions on the use and display of social security numbers, and impose restrictions on SPAM e-mail. In addition, many states have enacted or proposed privacy legislation mandating disclosures and limiting sharing of information among affiliated companies. Protecting customer privacy is important to AEGON Group companies. However, compliance with varying laws imposing differing customer disclosures and restrictions on information sharing is administratively costly and complex. AEGON USA supports the establishment of a uniform national privacy standard that preempts state law. AEGON USA also supports proposals to combat identity theft and SPAM provided that such proposals do not unduly restrict our ability to underwrite, service and market our products. Information Security Several recent incidents have been publicized where confidential customer data was either lost or stolen. In some cases the information was used to steal an individual's identity. Several bills are pending in Congress that require notice to the persons affected by such loss or theft, and provide standards for companies to follow in the event of such loss or theft. AEGON supports legislation that provides uniform preemptive national standards for notification to individuals whose personal information has been subject to a security breach for which there is a reasonable likelihood of harm. We also believe that any legislative solution should recognize that not all security breaches result in the misappropriation of personal information (for instance, data is often encrypted or protected by some other means that makes the data unreadable or unusable so that gaining access to the data does not make it likely to be misused). Legislation should also provide for a delay of notification to allow for involvement of law enforcement and to not compromise any criminal investigation that is underway. Finally, any security breach legislation should provide safe harbor provisions from legal action when companies have taken efforts (such as aiding in a criminal investigation and prosecution) to prevent harm to the consumer. 
|