Torts, Estate Tax Seen On GOP Front Burner

By Steven Brostoff, Washington Editor

NU Online News Service, Nov. 7, 9:44 a.m. EST,Washington? Legislation to regulate lawsuits and repealthe estate tax are likely to become Capitol Hill agenda prioritiesnow that Republican's have won full control of Congress, accordingto insurance industry representatives.

They also voiced a belief that the bill to provide federalsupport for terrorism insurance will not be stalled by Republicanconcerns that the measure fails to give business enough protectionsfrom lawsuits.

In a post election analysis after yesterday's GOP House andSenate election victories, their consensus on the terrorism measureis that the issue is so important to President Bush thatRepublicans will not want to sidetrack it, despite some anger overthe tort provisions, which allow U.S. businesses to be held liablefor punitive damages in the event of a terrorist attack.

"There clearly will be Republicans who say ?let's not do thisbecause we can get a better deal on tort reform in the nextCongress'," said Robert Rusbuldt, chief executive officer with theIndependent Insurance Agents and Brokers of America, Alexandria,Va.

However, he said, the reality is that if the legislation diesthis year, Congress will have to start from scratch. That means,Mr. Rusbuldt said, it could take six months or more to get a billthrough.

There is a chance to move legislation now, he said, during theupcoming lame duck session, and he believes Congress will act.

Monte Ward, vice president of federal affairs for theIndianapolis-based National Association of Mutual InsuranceCompanies, agrees there is a good possibility that some Republicanswill try to delay the bill.

But if they wait until next year, he noted, they will still haveto negotiate with Senate Democrats on the tort provisions, since 60votes are needed to invoke cloture and cut off debate.

Gary Karr, a representative of the Washington-based AmericanInsurance Association, added that both President Bush and SenateRepublican Leader Trent Lott, R-Miss., have spoken up since theelection and insisted that the terrorism insurance bill should getdone.

"President Bush is committed to this bill," adds David Farmer,senior vice president of federal affairs for the Downers Grove,Ill.-based Alliance of American Insurers. "The change in the Senateshould not have an impact on the issue."

Looking ahead to the next Congress, industry representativesexpect civil justice reform to be a major issue.

Mr. Karr said that with Republicans in control of both chambers,it will be easier to get medical malpractice reform, asbestoslitigation reform, and class action reform on the agenda.

Asbestos litigation reform, he noted, would have been a majorissue even if the Democrats had held on to the Senate, but thechances are now enhanced.

Nonetheless, Mr. Karr said, it will still be necessary to puttogether a bipartisan coalition in order to get any reformlegislation passed by Congress and sent to the president.

Mr. Farmer agreed with Mr. Ward that while the change inleadership and the Senate committee structure will put the tortreform issues on the agenda, there is not a 60-vote margin.

"Despite the change in leadership, the Democrats clearly can beeffective in opposing legislation," Mr. Farmer said.

Turning to taxes, insurance agents see an opportunity to movetwo important issues.

One is estate tax repeal, Mr. Rusbuldt said. One of the majorgoals of Republicans in the next Congress will be to make thetemporary tax cuts that were approved last year permanent.

Under the current law, the estate tax will phase out on Jan. 1,2010. However, because of a sunset provision in last year'slegislation, the estate tax will come back into being, exactly asit existed in the year 2000, on Jan. 1, 2011.

Permanent repeal of the estate tax is a major issue forindependent agents, Mr. Rusbuldt noted, because of the impact theestate tax has on agency perpetuation.

Maria Berthoud, IIABA's senior vice president of governmentaffairs, adds that another priority for agents in the next Congresswill be accelerating the amortization of intangible assets, such asexpirations.

The Treasury Department is working on a major reform of thenation's tax code, and corporate taxation will likely be part ofthe package.

Ms. Berthoud said that accelerating the amortization schedulewill be agents' top issue.

One issue that could cause concern for insurers is privacy,industry representatives said. The new chairman of the SenateBanking Committee will be Sen. Richard Shelby, R-Ala., who is astrong privacy advocate.

He supports legislation that would require financialinstitutions to obtain the affirmative assent of customers beforesharing their personal financial information with otherparties.

Ms. Berthoud said that Sen. Shelby could make things verydifficult for the insurance industry. IIABA, she said, will try towork closely with him to explain agents' privacy concerns.

Mr. Karr said that AIA would wait to see what Sen. Shelbydoes.

"We will take it as it comes," he said.

As for optional federal chartering of insurance companies, Ms.Berthoud said she believes the change in the Senate isimportant.

Republicans, she said, usually have a knee-jerk reaction againstany federal regulation. This, Ms. Berthoud said, is helpful toIIABA's position in favor of regulatory reform without creating anew bureaucracy.

Mr. Farmer said he does not think the change in the Senate willaffect the issue that much at this stage. He noted that most of theaction has been on the House side, and the House Financial ServicesCommittee's oversight hearings on state regulation willcontinue.