Large insurance companies like MetLife and Prudential want Nebraska Director of Insurance Eric Dunning to vote yes on a new penalty structure on life insurance companies that will drive up premiums and reduce consumer choice. Doing so would be devastating for seniors everywhere, including right here in Nebraska.
The problem is acute for Nebraska as we slide from being one of the best states to retire in into a state that people want to leave. In fact, no state in the nation has a higher percentage of people 55 and older still in the workforce today. So, it shouldn’t surprise anyone that Nebraska lost $500 million in annual income a few years ago from taxpayers migrating away.
Driving up the cost of financial tools seniors, empty nesters and even families use to ensure financial peace of mind is especially troublesome in Nebraska. That’s why it’s so concerning that big insurance companies like MetLife and Prudential seem to be trying to increase their market share at Nebraskans’ expense by making it harder for their competitors to operate in the marketplace.
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These big traditional life insurance companies recently succeeded in getting the National Association of Insurance Commissioners, a standard-setting regulatory organization that works with each state’s insurance commissioner, to approve a new rule that would impose a new 50% capital charge on insurance companies backed by private equity. Now, these companies are pushing Dunning and other insurance directors to vote yes on the NAIC’s plans.
In lobbying for this rule’s implementation, these companies argued that private equity firms take too much risk, and the government needs to set this money aside in the event of losses. However, this isn’t an issue of mitigating risk like they claim. It is an issue of increasing burdens and costs on their life insurance competitors, which would potentially make them less competitive in the marketplace.
Nebraskans like the life insurance plans offered by big insurance’s competitors because, while they may not be from a brand-name company, these low-risk policies are often less expensive and more personalized. Unfortunately, however, they may no longer be if Dunning votes yes on the NAIC’s plans. The cost of our seniors’ life insurance policies will increase as a result.
Dunning and his boss, Gov. Jim Pillen, know that these new capital charges are the last thing Nebraska’s seniors need to see today. They are working more than seniors in any other state, and they are struggling to make ends meet.
If recent data from the University of Nebraska-Lincoln’s Bureau of Business Research and the Nebraska Business Forecast Council are of any indication, things are about to get worse for them as this state braces for yet another economic recession.
Now is not the time to make life even more expensive for Nebraska seniors; now is the time to protect the free-market policies that once put the state in the running for top retirement spots in the nation.
There is little doubt that these radical changes to retirement plans will hurt seniors and could have a snowball effect on our economy. With millions of people from across the nation already retiring to Arizona, Texas and Florida, it is critical that our leaders oppose schemes that will only make it more expensive to live in the Cornhusker State. Saying no to this change will ensure our economy, tax revenue numbers and overall consumer welfare will be better off.
Roy Christensen is a Lincoln businessman and former City Council member.