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OCE-84-1 Economic Implications of the Fair Insurance Practices Act [i] (1984-04-06)

handle is hein.tera/ecifipa0001 and id is 1 raw text is: BY THE COMPTROLLER GENERAL Report To Senator Orrin G. Hatch, Senator Lowell P. Weicker, Senator Nancy Landon Kassebaum, And Senator Paula Hawkins, United States Senate OF THE UNITED STATES Economic Implications Of The Fair Insurance Practices Act The proposed Fair Insurance Practices Act (uni- sex insurance) would prohibit distinctions based on race, color, religion, sex, or national origin in pension plans and insurance contracts. Because of the unknown reactions of insurance compan- ies, pension plan sponsors, and state insurance regulators, the precise effects of the bill are uncertain. However, GAO does believe that the bill would have substantial economic effects, including potential unfunded liabilities for life insurance companies and pension plans which could cause some life insurance companies to become insolvent. The bill would also impose increased administrative costs, create financial redistributions among employees and policyhold- ers, and have generally modest effects on price distortions and economic efficiency. GAO concludes that the short-run effects of the bill on increasing administrative costs and insol- vencies would be particularly significant. The transition period called for in the bill (between the date of enactment and the bill's effective date) is also not feasible. Therefore GAO recom- mends that the Congress consider extending this period from 90 days to at least one year and exempting existing individual insurance contracts from the provisions of the bill. vD Srl;, 00 7GAO/OCE-84-1 1 ce U ,\% APRIL 6, 1984 .v Q /.-