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October 2008
   VOICES FROM THE FIELD
Drop in Local Membership For the first time since the 1920's membership in local associations dropped; the reduction was substantial in some places. When the membership campaign ended in June 1981, the total came to 131,040. This was 8.786 less than a year before. A number of reasons could be cited for the sudden decline. Some large companies, notably the Metropolitan, were reducing their field forces with perhaps an eye toward pursuing alternate marketing systems. Among the agents themselves there were many with diversified interests who preferred to be called "financial planners." To them, the tradition-minded life underwriters associations had lost some of their relevancy. And as always, there were many agents who might benefit immeasurably form association membership but declined to join. Often, there had been no effort to reach them. In his comments to the National Council at the NALU's 92nd convention in Atlanta that fall Bobo said, "There are no statistics that will support the decline we have experienced this year. Even when looking at projections of agent population extending into the 1990's there is a clear indication of a potential of 75,000 agents over and above the numbers who are now members of our local associations." Emphasizing the importance of having the industry's field force identified with associations in order to perpetuate the business on a high plane, he exhorted the agents:
The comment was timely. The changing social climate dictated an urgent need for agents to shore up their defenses and reassert their commitment to professionalism and high standards. Among those currently attacking life underwriters and their work was Andrew Tobias, whose recently published (and highly readable) book, The Invisible Bankers, was receiving a lot of attention. Many of the points developed by Tobias were reminiscent of the FTC's staff report of 1979. Some harkened back to an earlier day, and one could detect in his charges of industry inefficiency echoes of the TNEC hearings of 1940. Alan Press, a general agent for Guardian Life in New York City, undertook to challenge Tobias's assertions and the two met in lively debate on a popular talk show. In his highly critical review of The Invisible Bankers, published by Life Association News shortly afterwards, Press noted:
Negative publicity came from other quarters, too. A National Broadcasting Company television special entitled "Protection for Sale: The Insurance Industry" moved Bobo to write: "To take an industry as large as insurance and spend an hour raking it over the coals, largely with distorted or contrived information and with complete disregard for any merit or value that industry produces can hardly be considered objective reporting. We do not expect NBC to be our cheerleader, but we do believe we have the right to expect basic integrity from an organization vested with so much of the public's interest."[xvii] A similar attack in the name of consumerism occurred a year later when Random House published How Life Insurance Companies Rob You and What You Can Do About It, by Walter S. Kenton, Jr. A chartered Life Underwriter and an apostate from the industry, he presented the life insurance salesman in perhaps the most unflattering terms since the muckrakers of the early 1900's. The difference was, of course, the muckrakers lived in an era when abuses were flagrant and pervasive. "As a sales manager, under pressure to produce more business, " he related, "I'd load up my car with salesmen and drive to a low-cost housing development or trailer court. I'd give the boys a little pep talk, and then we'd burst out of the car like Green Berets." It isn't easy, of course to defend a business against uncomplimentary revelations like that, except to point out that such behavior is not characteristic of the way most full-time, career agents operate. Jack Peckinpaugh, general agent for Indianapolis Life in Muncie, Indian, was elected president of the NALU for the 1981-82 term. Besides the numerous Association offices he had held, Peckinpaugh had served as NALU's membership chairman and was a former president of the Million Dollar Round Table. "To the many whose lives he has touched for the better," Life Association News commented, "he is known as a person without pretense or façade, and who has the uncommon facility to put others immediately at ease." Noting the drop in membership, Pekcinpaugh urged the agents to rejuvenate their membership drives with personal solicitations. "The members are out there but they have to be sold," he said. "We've got to go to them, explain what NALU is and what it is doing for them. We have to encourage them to take an active part in this great association. Letters and promotional material won't get the job done. Membership has to be sold just like life insurance: Eye to eye and person to person." In July 1982 Peckinpaugh told the members of the Million Dollar Round Table at their fifty-fifth annual meeting in Atlanta, "Unity alone can help the underwriter meet the increasingly urgent and unexpected demands of this decade. It's my belief that the unaligned and uncommitted will, at best, be lost and, at worst, be a millstone to those fighting the good fight. We need unity to combat the unreasonable, the unprincipled and the unworthy." On the same occasion, Peckinpaugh touched on a topic of increasing concern to the associated agents—rebating. The consumerist movement had generated pressure to dismantle the anti-rebating legislation carefully built up over the last hundred years in the various states. "The anti-ani-trebating movement in the United States is, in fact, anti-consumer, anti-agent and anti-company," he said. "It is ultimately, if unintentionally, anti-life insurance." Pointing out that repeal of the anti-rebating laws would artificially raise the cost of doing business and so raise the cost of coverage, he said the small consumer would suffer most because "he would end up subsidizing the bargains received by more sophisticated and aggressive buyers."[xviii] Meanwhile, legislative activity in Washington had kept the NALU's legal staff and the Association's leaders fully occupied. The second year of the Reagan administration saw the passage of another tax law that affected the business and the agent's work. Besides revising the life insurance company taxation's formula, the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA) imposed a penalty tax on certain annuity withdrawals, placed limitations on pension plan benefits and imposed additional restrictions on certain plans. The NALU had opposed proposals to eliminate interest dedications on consumer loans and restrictions of pensions and group life insurance. Due to the efforts of the AALU, some of the pension proposals were softened. 'On the positive side, as regards to pensions,' NALU executive vice president Bobo observed, 'the liberalization of the limits on Keogh plans will expand that market and hopeful offset most of the losses anticipated by the reduction in tax leverage in pension plans for high income people." With the increasing legislative activity, the NALU's legal department was pleased to welcome its first woman lawyer, Danea Keohoe, to the staff. A graduate of Georgetown University, her primary area of responsibility became the taxation at the federal level of life insurance products and policyholders. She had worked for some time in the NALU's public relations office while completing her studies at Georgetown. Her familiarity with the agents' problems and interests as well as her skills as a writer made her an effective lobbyist for the agents on Capitol Hall. The Association held its 1982 convention in St. Louis. Rice E. Brown, an agent for National Reserve Life/Security Benefit Life in Topeka, Kansas, became president of the national organization. Characterizing him as a "doer" the Association's magazine pointed out that Brown had served as a trustee, secretary and president-elect, and as chairman of the very important State and Federal Law and legislation committees. "During his tenure as chairman of the Federal L&L Committee," the editor observed, "he received national recognition when in testimony before congress and through forceful committee action, he persuasively stated the national association's opposition to national health insurance schemes, inappropriate intrusion of the Federal Trade Commission into the life insurance business, and costly expansions of Social Security." Tall and slender, he made an impressive figure. Brown was the first NALU president with a full beard since Layton Register, who had been president in 1900. With his contagious enthusiasm and personal warmth, coupled with the Westerner's easy informality, Brown delighted the agents and charmed industry leaders as well as politicians. Representing those whom favored providing fuller financial services to clients, he held optimistic and liberal views on the agent's function in a time of consumerist activism. Life Association News commented:
Such diversification appealed to many agents who began to assume the role of financial planner. Not a few life underwriters acquired the necessary credentials and assumed the title. Often they formed partnerships with accountants and brokers to provide these additional services all under one roof. Undeniably, for certain clients the idea of "one-stop shopping" had considerable appeal. Recognizing the extensiveness of the financial planning movement and the diverse functions many agents served, the NALU sought to help the associations recover recent losses in membership by broadening their appeal. Membership committees began developing ways to contact and attract more home service agents, fraternal agents and agents selling multiple lines of insurance. It was a logical step and the Association, with its tradition of service and professionalism and its large resources had a great deal to offer agents working in these areas. Consequently, the NALU formed subcommittees of home service and fraternal agents, and a full committee on Multiple Line was established. Responding to the need for wider appeal, Life Association News began devoting more attention to the work of the home service agent and the concerns of those involved in selling multiple lines. Predictably, one of the first recommendations of the multi-line committee was a professional liability policy with broader coverage. Commenting on the NALU's efforts to serve the various segments of the field force, Jack E. Bobo told the delegates at the St. Louis convention, "The challenge to NALU will be to nurture the kind of maturity that will accommodate the differing philosophies that spawn a wide variety of marketing strategies. It is reasonably clear that we are not going to be as homogeneous as in former times, and we will likely embrace a broader range of activities that are just now starting to be defined." In December 1982, the General Agents and Managers Conference announced the appointment of Dennis G. Stork as its new executive vice president. Stork's background was in association management. At the time he agreed to head the GAMC office in Washington, he was executive vice president of the Illinois Association of Life Underwriters. Stork quickly proved his capabilities as a manager. Besides exercising a desirable fiscal responsibility, he soon developed a talented and loyal staff that gave the general agents and managers exactly the kind of services and representation required. In a further bid for broader appeal, the NALU board of Trustees at its January 1983 meeting initiated a bylaw amendment changing the NALU motto from "Life Insurance, a Declaration of Financial Independence," to "Providers of Financial Independence." NALU president Rice Brown explained, "The new motto should reflect the board scope of responsibilities life underwriters owe their clients. Many find themselves acting as consultants and providing a variety of financial services. If adopted by the national council at the NALU convention Chicago next September, the motto will be incorporated into a modified version of the NALU logo." The board also devoted considerable attention to ways of making local association meetings more profitable and stimulating. Reporting on the meeting Brown explained, "More diversity must be introduced into our programming so that the meetings will have a wider appeal. Newly-elected board member, Alan Press, CLU, agreed to act as chairman and NALU secretary Michael Keenan, CLU, will serve as a member of the task force charged with developing proposals for improved programming. Since broader appeal is a primary goal, special efforts have been made to ensure that the membership of this task force represents all segments of the NALU family." The board also decided to change their meeting schedule. Ever since the Association ceased having midyear meetings the NALU Executive Committee had been meeting in January and June. The new calendar called for a spring meeting in April and a fall meeting in November. The September pre-convention meeting date remained unchanged, and the post-convention session, a somewhat perfunctory meeting, would still be held during the post convention luncheon. Brown mentioned another topic of current interest in his report on the board meeting:
One legal issue that plagued the insurance industry throughout the 1980's arose form the banking industries repeated attempts to enter the life insurance business. The law of the land had always held that banking and insurance should be kept separate. In 1983 the banks made a breach with the so-called South Dakota loophole when they prevailed over that state's legislature, despite the vigorous opposition of the South Dakota Life Underwriters Association. "This ominous carte blanche was placed in the hands of banks last month," H. James Douds, general counsel to the NALU, informed the agents in April, "when legislation was enacted in South Dakota permitting banks chartered in that state to either underwrite and sell insurance directly, or acquire insurance companies or agencies for the purpose," The danger was, of course, that other states might adopt similar legislation. Douds suggested that perhaps the best way to combat the spread of permissive legislation would be to seek further amendment of the Bank Holding Company Act in Congress. The agents had been fighting a similar battle in Delaware for some time. Discussing the implications of the South Dakota loophole Douds said:
Potential dangers of the banks' further entry into insurance was emphasized in Washington the following May by Bruce W. Foudree, Iowa's Commissioner of Insurance, when he appeared before the Senate Banking Committee, chaired by Senator Jake Garn of Utah. "Individually, operations of insurers, securities broker-dealers, banks, savings and loans and real estate companies involve enough hazards and difficulties in today's environment," he said. He indicated that the combination of these activities under one roof "carries with it the potential combination of insurance, credit, investment, and property risks not previously known or foreseen. Problems of regulation are compounded by such combinations; the ability of regulators to protect consumers is affected." In his "Across the Board" column of April 1984, NALU trustee Alan Press said, "We have good reason to feel threatened. Banks say they will deliver insurance more competitively by reducing distribution costs (meaning agents' commissions) and more conveniently. Even if either contention were true (neither is), banks should still be barred from selling insurance. In the end it would be the consumers who would suffer most." Reinforcing the argument for separation, Press pointed out:
Testifying before the Committee on Banking, Housing and Urban Affairs of the U.S. Senate in March 1984, NALU trustee David F. Woods complemented, "However you look at it, the banks' record on credit tie-ins paint an unappealing picture of abuse: higher premiums, exorbitant profits, reverse competition for higher commissions, massive market penetration rates, unnaturally low loss ratios, and inadequate disclosure to consumers for double coverage's, policy expirations, and claims collections. Please don't take my word for it," he added. "Read the record, and then reassess the banks' claims of benefits to the public in the context of unrestrained use of credit leverage in insurance sales."[xxiii] Despite the powerful influence of Governor DuPont, the pro-bank bill failed to pass the Delaware legislature. Its failure was due almost entirely to the highly coordinated efforts of the associated life underwriters in that state. On July 6, 1983, the Supreme court decided in Norris vs. Arizona that employee retirement benefits based on contributions made after August 1, 1983, must be calculated without regard to the gender of the employee. "The effects of the Norris decision on the insurance product, while serious, willing time be solved," observed NALU counsel William R. Anderson. "A far more destructive operative is at work, however, when one considers the indirect attack by the U.S. Supreme Court upon the regulation insurance in the several states…Little did Nathalie Norris realize, when she filed her class action suit in 1978, that the ultimate decision would 'revolutionize the insurance and pension industries,' as Justice Powell argues in his dissent," Anderson commented. The Association held its 1983 convention at the Hyatt-Regency Hotel in Chicago. At the same time both the NALU and the Association for Advanced Life Underwriting we deeply involved in delicate negotiations with the Select Revenue Measures Subcommittee of the House Ways and Means committee. The aim was to convince the Subcommittee to delete three "product provisions" form the proposed Stark/Moore revenue bill, which would create a corporate tax structure for life insurance companies. Although the convention activities proceeded on schedule, the negotiations occupied a lot of the leadership's attention, necessitating an extraordinary late-night NALU board meeting on Monday, September 26. Among other things, the provisions proposed to change the tax cost basis of a permanent life insurance policy, limit the deduction of interest on policy loans over $50,000, and tighten group insurance rules. The NALU argued that all these provisions would "directly and adversely affect policy-holders." The co-sponsor of the bill, Representative Forntey H. "Pete" Stark of California, was a featured speaker at the opening session. (This was the day before subcommittee was to go into its mark-up session.) Stark urged the insurance industry to compromise, warning that an "all or nothing" stance would only alienate the committee members and exclude the industry from negotiations. The nearly 3,500 agents and guests attending were kept posted on developments as the negotiations proceeded. Relating the day's events, Life Association News managing editor Joseph C. Razza, Jr., reported:
Besides endorsing the new motto for the Association, the National Council approved the establishment of a standing committee on home service. To accommodate the multiple-line agents, they also agreed to recognize the Chartered Property and Casualty Underwriter (CPU) designation as one way of satisfying the education requirement for continued membership in a local life underwriters association. The youthful and athletic Robert B. Hughes, general agent for Maccabees Mutual in Lansing, Michigan, succeeded Brown as president. A graduate of Michigan State, where he was a track and cross country star, Hughes had a ling record of Association service, both locally and nationally. "I've always been very much aware of the many people who have given men a boost along the way," he told an interviewer. " To reciprocate in kind to others seems to me to be one of the most meaningful legacies we can leave." He credited much of his success to his wife, Dee. "Her support caring, sharing and ability to take the good with the bad have made the difference on many occasions when I wanted to drop out of the race, both on the track and in business," Hughes confided. He added that a major thrust of this administration would be "to continue membership growth among a more diversified life underwriter fraternity." In January 1984, the LUTC announced that it would grant a professional designation: Life Underwriter Training Council Fellow (LUTCF). "LUTC Fellow becomes the first designation offered by LUTC in its thirty-seven year history, said Norman G. Levine, chairman of the Council. The first conferment of the new designation, he said, would take place that September in Kansas City during the NALU convention. Eligibility depended upon students completing a combination of LUTC courses to accumulate three hundred "Study and Practice Equivalents, or credits. They also had to belong to a life underwriters association in the year of conferment. The LUTC had for some time been awarding a Life Insurance Marketing diploma to all who successful completed the personal and a business insurance courses. The NALU took another step toward broadening its international outlook during February 1984 when the Association's president Robert B. Hughes and executive vice president Jack E. Bobo traveled 25,000 miles to Australia, Singapore and Hong Kong. There they visited life underwriters associations, spoke at their conventions and talked with company and government officials. Much of the discussion entered on common problems and goals and the best strategies for creating a better climate n the market place. In their addresses to the Australian national convention at Canberra, both emphasized the need for agent education, licensing standards and good public relations. Life Association News reported:
Pressure from the banking industry for deregulation was at a peak in 1984. "In recent months," Hughes observed in his address in the Million Dollar Round Table at their annual meeting in New York City that June, "we have been exposed to very powerful presentations by prominent banking officials offering their reasoning as to the inevitability of deregulation permitting them to engage in commercial enterprise, including insurance. Such presentations," he said, "whether before the Congress or industry groups, have been laced with simplistic analogies, arrogance, pretended altruism, and outright misrepresentation of public demand." Hughes expressed particular concern about the coercive powers of lending institutions to link credit with life insurance sales. "There are many reasons why we need to be alert to these latest attempts to infiltrate our marketplace," he reminded his international audience of leading insurance agents, "but chief among them is the stewardship role we must play with respect to our industry" Appealing to MDRT members as industry stewards, Hughes urged them to take an active role in the legislative fight against deregulation. "One of the most serious efforts to bypass the intent of Congress," he said, "is taking place right here in New York—and it's a battle in which all fifty states have a vested interest, because of the enormous capabilities of the banking industry domiciled here. As the NALU and other industry organizations defended the integrity of the life insurance business against the attempted invitation of the banking industry, congress passed another tax law. While the Tax Reform Act of 1984 significantly changed the basis upon which life insurance companies were taxed, it also included universal life insurance within the definition of life insurance, thus preserving its favorable tax treatment. Elsie M. Johnson, the NALU's comptroller and a member of its headquarters staff since 1955, died unexpectedly at there home in Fairfax, Virginia, on June 30, 1984. Her death was the result of coronary insufficiency. Johnson was one of seven NALU staff members who moved from New York city to Washington in 1956 to establish the organization's headquarters in the nation's capital. She was succeeded by Joseph E. Dillon, a certified public accountant and a graduate of the University of Maryland. As the Senate proceeded to consider the banking deregulation bill in Washington during the week of September 9, the NALU was holding its annual convention in Kansas City. An increasing number of convention delegates contacted the offices of their Senators on the pending legislation. Even as the convention adjourned at noon on the 13th, delegates in Kansas city were exhorted to continue contacting senators, while at the same hour in Washington the Senate was settling in for a debate on S. 2851 that was fated to last until almost midnight." Of particular interest to the delegates was an amendment offered by senator Christopher J. Dodd of Connecticut to close the so-called South Dakota loophole in the Bank Holding Company Act. Despite heavy opposition and much to the agents' delight, the bill passed with the Dodd amendment intact by vote of 89-5 at 11:30 p.m. on September 13th. The Kansas City convention had an international flavor, owing the fact that the presidents of the life underwriters associations of Canada, Great Britain and Australia spoke at the general sessions. "Bridging the gap between countries, between nations, between associations—we have much to learn form your great history," said Tony Gordon, president of the Life Underwriters Association of Great Britain and Ireland. "I the United Kingdom, our associations only 10 years old. We have some 10,000 members, about 3 percent of the potential. It takes many years to gain the acceptance and earn the trust of companies and governments," he said, "but, we're striving hard to achieve this." Michael C. Keenan, a general agent for the prudential in Skokie, Illinois, became president of the NALU in 1984. Besides enjoying a successful business career, Keenan had served on many Association committees and could look back on a fine record of time and energy spent in the cause of agent professionalism and the industry's welfare. In his acceptance speech at Kansas City, he stressed the importance of recruiting new members for the associations. "Enough is enough," he said. "The time has come to leave no stone unturned. All who make money selling insurance belong within the NALU family." Among the new officers was John H. ward, III, of Louisville, Kentucky, who replaced the NALU's long-tenured treasurer L. Kent Babcock. Ward's tireless efforts on behalf of LUPAC in recent years had won the admiration of everyone concerned about the industry's political strength. His long record of Association service, along with his well-known success as a businessman, made him a natural choice as Babcock's successor. Ben Feldman, an agent for New York Life in East Liverpool, Ohio, was named the 1984 recipient of the John Newton Russell Memorial Award. Called "the incomparable life insurance salesman," Feldman has an international reputation for unparalleled success in promoting life insurance. "Each of us has heroes, depending on our backgrounds and our interests," said H. Kirke Lewis who presented the award. "I'm sure they are many and varied, but when it comes to life underwriters," he said in reference to Feldman," there seems to be universal agreement that one person has earned and deserves our admiration, our respect and our affection for a lifetime of absolutely magnificent accomplishment and service." In the summer of 1985, the NALU launched another publicity campaign to help agents respond to the consumerist movement. Called "Financial Fitness," it consisted of a series of 90-second television news segments for local newscasts; a 60-second daily "Financial Fitness Report" for radio a question-and –answer column, "Your Financial Fitness" designed for distribution to suburban newspapers; and an attractively designed brochure entitled "Shaping Your Financial Fitness. Describing the initial television "news clips" Life Association News explained:
It was a modest program, but evidently a very effective one. Speaking at the "Tom Grant" breakfast the following November the NALU's new president, Moorland G. McManigal, reported to the company executives that 135 television stations had already requested copies of the 90-second spots. The only contested post among the officer and trustee positions at the Association's annual convention that fall in Anaheim, California, was that of secretary. Three candidates vied for it: trustee Mary E. Fort of Chevy Chase Maryland; past trustee Robert A. Pierce of Tigard, Oregon; and Arthur Abramson of New Orleans. Abramson won. In electing Morland G. McManigal, an agency manager for State Farm at Fair Field, California, the Association had its first president to represent the multiple line agents. A former college athlete of impressive physique and a warm-hearted family man, McManigal was universally liked and made many friends for the NALU and the industry during his term of office. The Association's recovery form the great membership loss of 1981 was a slow process. By June 1985 membership in local associations totaled nearly 133,000. Besides reaching out to the various branches of the field force, the particularly in the legislative arena. Addressing the opening session of the convention, outgoing president Keenan expressed immense satisfaction at the accomplishments of the last year. He cited the impressive advances in life underwriter and consumer education, public service and public information programs, effectiveness in both state and federal and legislative advocacy, identification of life underwriters as essential in the financial planning process, improved communication within the NALU federation of state and local associations, and increased membership. Congress at this time was in the process of designing a new income tax code. Of particular concern to the agents and industry leaders were a number of proposals to tax life insurance products. The NALU had joined forces with the American Council of life Insurance (since 1983, headed by politically astute Richard S. Schweiker, former Senator from Pennsylvania and Secretary of Health and Human Services,) and the Health Insurance Association of America in a massive mailing campaign to voice the people's opposition to having their life insurance savings subject to further taxation. Commenting on the gratifying response for support in fighting the proposed taxes, NALU executive vice president Jack Bobo observed, "For a long time we have wondered exactly what our capabilities really were in terms of an all our grass roots lobby if effort. Thanks to the joint venture…, that question has now been answered and in a most satisfactory manner. The membership responded as requested and their policy holders let congress know how they felt about unwise provisions within the proposals under consideration. "Emphasizing the need for continual vigilance, Bobo told the National Council at Anaheim:
Bobo was the recipient of the 1985 John Newton Russell Memorial Award. Citing him as "the consummate professional in underwriting," the committee stated, "Through your achievements and your writing s and speeches of clarity, reason, depth of knowledge, and credibility, you have given substance to your lifelong credo: 'One must earn the right to be heard.'" The NALU family was saddened to hear of the death of the Associations former executive vice president C. Carney Smith, on May 23, 1986, at the age of seventy-three in Kalamazoo, Michigan. Since retiring, Smith had been a member of the board of Liberty National Corporation in Birmingham, Alabama and consultant to several other life insurance companies. He was also widely known as the "voice of NALU" on LANSCAN, the audio tape version of Life Association News. The associated agents suffered a severe setback in the area of state regulation in 1986 when consumer activists succeeded in having rebates legalized in Florida. Lamenting the Florida court's decision to overturn anti-rebating case decision handed down by the Florida Supreme Court on a four-to-three vote sent a shock wave through our entire membership. The Florida ALU and NALU have worked together closely for the past five years on this case and we are still not finished." The great concern, of course, was that pro-rebating forces would not be content with victory in Florida, but move on to other states. In California for instance, where the legislature had recently passed strong anti rebating measures, the Consumers Union was in court challenging the constitutionality of the law. Noting that the California ALU and NALU were working together in support of the anti rebating law, McManigal told the delegates that because of the "tremendous impact" of these rebating cases on the agents' work, he had appointed a task force headed by NALU past president Thomas J. Wolff to "explore ways our membership can cope with this emerging threat. "The initial approach of the task force," he explained, "was to review the past activities of NALU and the state associations in the rebating file. Next, the talk force reviewed additional activities that Na\ALU and the state associations might put into action in the future to head off this threat to the insurance buying public." Vigilance had its reward. In July 11987, the California Insurance department and the California Association of Life Underwriters scored an impressive victory over the Consumers Union when the Superior court in San Francisco upheld the constitutionality of the state's anti rebating laws on the basis that the California legislature reasonably determined that rebating is "an activity not in the best interests of citizens of the State of California." Ironically, the Court found the testimony by a Consumers Union witness a compelling argument for rejecting the suit. In its decision the Curt wrote, "While all of the testimony was weighed by the court, one for the most important pieces of testimony was what was said (and, perhaps, what was not said) by David Goodwin, the insurance agent form Florida. His testimony, while strongly supping rebating, also demonstrated a practical abuse that would follow. While in the Florida Anti-Rebate Law was struckdown, Mr. Goodwill was not yet engaging in rebating because of the position taken by the Florida Insurance Commissioner. With the Commissioner cautioning against unequal rebating, Mr. Goodwin chose not to rebate under those conditions."[xxviii] Occupying much of the NALU's attention as well as the nation's during 1986 was the new tax code that Congress was busily engaged in division. "Our most difficult area lies in the treatment of the interest on policy loans," Bobo commented. In his report to the National Council Bobo said:
While preserving the essentials, ultimately the life insurance industry was not entirely happy with the results in Washington. When it finally became law. The Tax Reform Act of 1986 eliminated the tax deductibility of IRA contributions for highly paid persons who are covered by pensions plans, reduced to $7,000 the maximum contribution to salary reduction—401(k) plans, established new non discrimination rules for accident and health plans and group term life insurance, and limited the deductibility of interest paid with respect to loans on corporate-owned life insurance policies. David F. Woods of Springfield, Massachusetts, succeeded McManigal as NALU president. A former U.S. Air Force pilot, Woods had grown up in Baltimore, graduated from the prestigious Gilman Preparatory School and Loyola College, and begun his insurance career at the home office of United States Fidelity and Guaranty Company in 1961. He joined the Massachusetts Mutual in Springfield as an agent in 1966. His notable record since was highlighted by Life and Qualifying membership in the Million Dollar Round Table, consistent qualification for his company's to production awards and a long history of Association leadership. Former NALU president Norman G. Levine received the Russell award for 1986. Listing his many accomplishments, the committee praised Levine as "a preeminent leader of the life insurance business, a respected role model for untold life underwriters worldwide, and the worthy recipient of the highest individual honor in life insurance for service above and beyond the call of duty." Noting that he had held the top elected positions of the National Association of Life Underwriters, the General Agents and Managers Conference and the Life Underwriter Training Council, the tribute stated, " As an unparalleled communicator and by notable personal example, you have motivated our ambitions and strengthened our confidence in times of vexing change…." Late in 1986 the NALU purchased the controversial industry publication Probe form Longmont Publishing, the old established London publishing house, which had acquired the monthly along with the purchase of another industry publications. The asking price was $25,000. In December Probe appeared for the first time as an insert with Life Association News. Introducing the readers to the innovation, Life Association News editor Edward Keenan told his readers:
Donald F. Barnes had been the newsletter's most recent editor. Continuing as contributing editors were George G. Joseph and H. Kirke Lewis. Macfarlane guided Probe through 1987 and into early 1988 when Sam Gaglio, former editor of Life Association News, became editor. Among the issues that dominated much of the industry press during the 1980s was the newly diagnosed and always fatal acquired immune deficiency syndrome, or AIDS. As the decade advanced and the disease spread at an alarming rate, projected statistics created an actuary's nightmare. Because of its reluctance to undertake unnecessary risks associated with AIDS (primarily by insisting upon including tests for the presence of the AIDS virus in the routine medical examination before underwriting individuals), the life and health insurance industry became the object of much criticism, targeted for both legislation and litigation. "We are perceived by many to be discriminatory—in the narrowest and most negative sense of the word—by weeding out people who through no fault of their own, face the gravest risk." Commented Donald K. Ross, chief executive officer of New York Life, in the summer of 1987. "With the onset of AIDS, the question of risk classification becomes a question of survival for our companies and our industry. A year ago, based on reasonable assumptions, we determined that if we did not combat anti-selection by AIDS carriers and did not raise our premiums, New York Life would probably face insolvency within a decade." Foreword by Alan Press, 1988-1989 NALU President Preface by Jack E. Bobo, 1989 NALU Executive Vice President Chapter 1 Laying the Foundation—A Meeting at the Parker House Leading Figures—Ransom, Carpenter, Blodgett and Plummer Conditions Leading to the Foundation of the NALU Rise of Modern Life Insurance and the General Agency System Issues and Accomplishments of the First 15 Years Chapter 2 In the Wake of the Armstrong Investigation A Royal Commission Investigates Life Insurance Operations in Canada A Period of Growth and Visibility for the NALU Under Strong Leadership The NALU Plays a Leading Role in Insurance Education Chapter 3 The NALU's Extension of Activity The Agents Move for Recognition Chapter 4 Annual Conventions and Midyear Meetings The NALU Celebrates Its 50th Anniversary Chapter 5 The NALU Joins the Industry in Legislative Battles The NALU Establishes the National Quality Award Chapter 6 Controversies and Schisms (1946-1956) Chapter 7 Dispute Over Minimum Deposit Insurance Plans GAMC Stages First LAMP Meeting The NALU Celebrates Its Diamond Jubilee Year The NALU Increases Political Activity U.S. Senate Antitrust and Monopoly Subcommittee Investigate Life Insurance The NALU Responds to Consumerist Activism Chapter 8 The NALU Reaches the Century Mark FTC Releases a Study Critical of the Insurance Industry Formation of the Women Life Underwriters Conference Drop in Local Membership The NALU Issues Statements on AIDS The NALU Combats a New Wave of Attacks The NALU Celebrates a Century of Service [vii] LAN, October 1979, p. 43 [xv] LAN, October 1981, p. 65 [xvi] LAN, May 1982 p. 192 [xvii] LAN, June 1982 p. 20 [xviii] Cf. LAN, August 1982, p. 63 [xix] LAN, October 1982, p. 28 [xx] LAN, February 1983, p. 14 [xxi] LAN, April 1983p. 30 [xxii] LAN April 1984, p. 14 [xxiii] Ibid., p. 20 [xxiv] LAN November 1983 p. 35-36 [xxv] LAN, May 1984 pp. 33-36 [xxvi] LAN September 1985 p. 37 [xxvii] LAN, November 1985, pp 61-63 [xxviii] Cf. LAN September 1987p. 46 [xxix] LAN, October 1986 p. 85 [xxx] LAN, December 1986, p. 4 © Advisor Today 2008. All rights reserved.
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