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OCE-84-6 1 (1984-09-27)

handle is hein.gao/gaobabnnk0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES i ~~ WASH.i OGN .C O4 B-2 13348 RELEASED SEPTEMBER 27. 1984 The Honorable James 3. Florio Chairman, Subcommittee on Commerce, Transportation and Tourism 111l1 lAIN N Committee on Energy and Commerce 125453 House of Representatives Dear Mr. Chairman: Subject: Comments on the Economic Implications of the Proposed Florio Amendment to the Nondiscrimination in Insurance Act (GAO/OCE-84-6) On April 13, 1984, you asked us to analyze your substitute to H.R. 100, the proposed Nondiscrimination in Insurance Act. As originally introduced, H.R. 100 was the equivalent of S. 372, the proposed Fair Insurance Practices Act, whose economic effects were analyzed in our recent report, Economic Implications of the Fair Insurance Practices Act (GAO/OCE-84-1, April 6, 1984). Our analysis shows that some of the economic effects of your substitute bill would be significantly different from those of the originally proposed legislation. In particular, the in- creases in unfunded liabilities created by the original bill for life insurance companies and pension plans would be reduced by between $18.3 and $21.6 billion. These reductions would result largely from allowing sex distinctions to continue in existing life insurance contracts and in pensions and annuities currently being paid to retirees. Further, because the substitute bill would reduce unfunded liabilities and extend the period for implementing the act's requirements, it would virtually eliminate the risk of insurance company insolvency resulting from the legislation. THE PROPOSED UNISEX INSURANCE LEGISLATION The proposed unisex insurance legislation (H.R. 100/S. 372), as originally introduced, would have prohibited distinctions based on race, color, religion, sex, or national origin in the marketing and pricing of insurance and pensions. So far as we know, the only one of these characteristics which is explicitly used as a risk factor in the pricing and marketing of insurance and pensions is sex. The bill would have required that sex- distinct premiums and benefits in existing and future insurance and pension contracts be equalized. A topping-up provision in the bill would have required that no one's benefits be reduced as part of the equalization process. S ' 1 (972120)

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