Louisiana House Bill HB386

Louisiana 2011 Regular Session

• Introduced: 4/25/11
• Refer: 4/25/11

Caption

Authorizes state retirement systems to have an insurable interest in their members and retirees so as to effectuate life insurance upon them (OR NO IMPACT APV)

Impact

The bill modifies existing laws that previously prohibited any insurance contracts without the consent of the individual insured. By allowing state retirement systems to secure life insurance, the bill is expected to generate an additional funding source, potentially easing financial pressures on these systems. However, it also maintains a safeguard by allowing members or retirees to object to the insurance policy within ten days, ensuring that no forced insurance contracts can be imposed without their consent.

Summary

House Bill 386 introduces a significant change to the regulations surrounding state retirement systems in Louisiana by allowing these entities to have an insurable interest in the lives of their members and retirees. This legislation permits the state retirement systems to effectuate life insurance policies on their members, with the retirement fund itself designated as a beneficiary for a portion of the benefits under these policies. This new provision aims to enhance the financial stability of retirement systems by enabling them to directly benefit from such insurance policies, thereby raising funds to support their obligations to retired members.

Sentiment

The sentiment surrounding HB 386 appears to be largely positive among proponents, particularly those within the legislative committee who view it as a proactive measure to strengthen the financial health of state retirement systems. Supporters argue that this bill could provide necessary funding for retirement funds, ultimately benefiting retirees. Conversely, the bill has sparked concerns among some advocates for retirees who worry about the implications of such insurance products and the potential for exploitative practices, emphasizing the importance of ethical standards in the management of retirement funds.

Contention

Debate around HB 386 includes concerns about the ethical implications of state retirement systems taking out life insurance policies on their members. Critics may argue that such actions could lead to conflicts of interest, as the financial incentives for insurance payouts might not align with the interests of members and retirees. Additionally, while safeguards are established with the opt-out provision, the initial power granted to retirement systems to create these contracts raises questions about transparency and trust, particularly concerning how these policies will be managed and monitored.