If there is any word that describes the state of the life insurance industry now that Congress has departed for the next six weeks, it is uncertainty. Indeed, the greatest uncertainty in recent memory.
And, given the current gridlock in Congress, and the likelihood it will get worse next year, the notion that the uncertainty will be swept away within a reasonable period of time is a pipe dream.
While the Gramm-Leach-Bliley bill of November 1999 removed a decade-old threat of intense competition from the bank industry in key products such as variable annuities, the current uncertainty hovering over the industry is far more comprehensive.
It involves the economy, tax policy, regulatory policy, and the involvement through new legislation of the federal government in solvency and international trade issues.
Equally important, the standard of care that agents must use in selling investment products going forward is very much up in the air.
The Securities and Exchange Commission now has five months to complete a study of gaps in current regulation and whether a uniform fiduciary standard should be required in the sale of investment products (even the limited number of products sold by agents through broker-dealers.)
The provision in the law dealing with the issue then gives the agency the clear power to draft a new standard-of-care rule based on the findings of the report.
At the same time, in public comments, agency chairman Mary Schapiro made clear she will not allow the notice-and-comment process to be used to water down the intent of the financial services reform law.
The SEC would follow the new law "to the letter" when writing its rules, she has said. "The regulatory process is not designed to re-debate issues that Congress has resolved," she said.