IFNY Free Enterprise Award to AIG’s Robert Benmosche

The Insurance Federation of New York, Inc. (IFNY) bravely held its 98th Annual Free Enterprise Award Luncheon on November 9th, drawing a crowd of 350 insurance leaders to New York’s Cipriani Wall Street. It was the first affair held after Hurricane Sandy at the venue and, according to the Guest of Honor, Mr. Robert Benmosche, IFNY sent a signal of recovery to the insurance community. The Free Enterprise Award was given to Mr. Robert Benmosche, President and CEO of AIG, who accepted it enthusiastically and complimented the insurance business for its resilience and its responsiveness during the hurricane Sandy disaster. Mr. Benmosche noted that, on the very day on which he was receiving the award, his own building had yet to regain power. One of the featured speakers of the day was Governor Dirk Kempthorne, former Governor of Idaho and U.S. Secretary of the Interior and presently, President and CEO of the American Council for Life Insurers (ACLI). Governor Kempthorne praised life insurance as an instrument for financial growth and gave a rousing talk to industry professionals about the honor and integrity of what they do, especially as demonstrated recently by the industry reaction to hurricane Sandy (his speech can be read, in it’s entirety, on page 30 of this issue). Mr. Nick Pearson, IFNY President, Ms. Cecilia Norat, IFNY Immediate Past Chairwoman, and Mr. Lance Albright, IFNY Chairman, each delivered remarks that focused upon Mr. Benmosche, the industry and upon IFNY itself, which this past year undertook a major support effort for an entity known as Boys Hope Girls Hope. Ms. Mary Lanning, Vice Chair of the group, thanked the Association profoundly for sponsoring so many students and exposing them to the various working components of the insurance industry. These students who are from the inner boroughs of New York are encouraged to look at the insurance industry for their future careers. Of the 350 in attendance, many were Presidents of companies and contributors to the effort. The Superintendent of the Department of Financial Services, Benjamin Lawsky, was scheduled as a guest speaker and arrived late in the program in working clothes fresh from his tour of Breezy Point in Brooklyn, which was devastated by hurricane Sandy. He found time in his busy schedule to make an appearance and address the audience. The Superintendent, who led an all-out-effort by the Department to assist those affected by the storm, praised the industry for its response and praised Mr. Benmosche for AIG’s responsible approach to repaying its bailout debt. In all, Mr. Lawsky was warmly received by the industry leaders who recognized his yeomen effort in deploying department “troops” to the areas devastated by the hurricane.

Governor Dirk Kempthorne on the Insurance Industry…and more! Insurance Federation of New York – November 9, 2012

Thank you Nick Pearson (Edwards Wildman) for that introduction and to the Insurance Federation of New York for inviting me.

 Let me start with a few words about Bob Benmosche, the recipient of the Federation’s Free Enterprise Award. I called a few of the executives that I now have the pleasure of working with. I asked them to please give me the sense of the man and what he has accomplished. They said he is incredibly consumer oriented. His philosophy ultimately, is that what we have in our industry are the promises that we make. Therefore, they are the promises we must keep. That is a tremendous philosophy.

 Bob is probably the proto-typical retiree, in that his attitude is to be active, fully engaged and productive. He is not one to take a different course — to sit and decline.

 In regard to what all took place at AIG … I believe that the best measure that can be taken of an individual is whether he or she answers the call of duty – or a cause that is presented. It’s easy to accept if it’s a highly coveted position. It’s extremely difficult when nobody wants it. It takes courage and it takes self-confidence. Facing a tough situation, Bob Benmosche truly proved to be the champion that everyone knew him to be.

 He became the advocate of AIG’s beleaguered employees, immediately becoming their champion.

 In this magnificent setting the Federation reflects its rich tradition of honoring courageous champions. And the Federation does so again today.

 I commend Bob. His story is inspiring. At the same time, this industry needs to continue to tell its story. Whenever you can, please take the opportunity to tell others our inspiring story so that they will realize what we are made of, what we have accomplished. It’s an incredible story.

 People have asked me, now that you have been at the American Council of Life Insurers for two years, how do you like it, and did you have a background in the industry? My background is that in my entire adult life I have been a consumer.

 And do I like the industry? I love it.

 I believe that it is an extension of my 23 years in public service. My motivation for being in public service was to help people. What other industry than the insurance industry exists solely to help people? You need only to walk outside to see the need for help, which we are addressing.

 In some of the posts I’ve held in the past I have been there in the midst of devastation. So, it was heartbreaking to see the aftermath of Hurricane Sandy. Ben Lawsky referenced what he is seeing out there on the ground. It will take a lot of cooperation, a lot of work to get things back to normal.

 I know this great and resilient city and the entire region is up to the challenge. And I’m gratified to note that the insurance industry is answering the call and helping the city and the entire region recover, pledging millions of dollars in support of relief efforts. This is nothing new for our industry. After the terrorist attacks on September 11, 2001, insurers also stepped up and did their part. For the thousands of people who lost loved ones, the life insurance industry eased the burden of filing claims. Companies processed claims quickly and with great compassion, even in cases when a death certificate was not available.

 On both the life and the property-casualty sides of the business, real questions arose over whether the attacks were an act of war, and whether claims would be excluded under the act of war clauses in policies.

 A Los Angeles Times headline captured the story: “Act of War” Exclusion Doesn’t Apply to Attacks, Insurers Say.

 That was a decision of the industry. I believe it fulfilled what we said earlier … promises made are promises kept. That is what the insurance industry is all about.

 We helped show our nation’s enemies that we are the UNITED States. We have political and philosophical differences, but when tragedy strikes, we stand together as a nation.

 We could use more people standing together these days. We certainly could use it in Washington D.C. as Congress and the White House begin to tackle the nation’s fiscal challenges. A little less partisanship will go a long way toward greater cooperation. I talk to my colleagues in the United States Senate and they say, “Dirk you wouldn’t like it here anymore.” We need greater bipartisanship. For example, when I introduced legislation to stop unfunded federal mandates on cities, counties and states – an effort that had failed for 20 years – I partnered with Sen. John Glenn, Democrat of Ohio, and got it done. Bill Clinton signed it into law. That is how we ought to get things done.

 And I think that Washington could learn a little more from American business.

 In your corporations with Boards of Directors … most of them work quite well. What would happen if down the middle of the Board of Directors’ table we placed an imaginary line. Everybody on one side… we will now call the blue team. Everybody on the other side… is the red team. Instead of dining together, the board members head to different rooms. The red room. The blue room.

 When a director’s term is up for renewal, the other team says, “No,” even if he or she is doing a good job. They figure out what to say so that director will not be reappointed.

 In fact, they may even raise money to use against this director, to try to embarrass him or her so that no one would appoint them to any board.

 I’ve just described the atmosphere of the United States Congress. It is not good. Somehow we have to come together, especially because the nation’s finances are greatly challenged. Many are looking at the work of the debt reduction commissions for a blueprint. Every commission including Simpson-Bowles — two very fine men — said everything was on the table.

 Should all good ideas be on the table? Absolutely. Without question. But, bad ideas should not be on the table. And any suggestion that puts life insurance industry products on the table is a bad idea.

 The principle that life insurance should not be taxed is not new. It was established during the Civil War. The government in Washington considered several taxes to pay for the war, and in 1862 enacted the first income tax.

 And when a tax on life insurance premiums was considered, Massachusetts Senator Charles Sumner said on the Senate floor: “Here you are proposing to tax those who have taxed themselves… that the Nation might not have to support them.”

 Then, in 1866, the Treasury Department reaffirmed the importance of life insurance by ruling that death benefits are not subject to the income tax. This tax treatment of life insurance became part of the current tax code in 1913.

 For more than a century, not taxing life insurance has been a fundamental principle of tax policy. It should remain so for at least another 100 years. Society benefits when people are encouraged to take personal responsibility.

 Congress must address the looming ‘fiscal cliff.’ But it also must recognize our nation has another big challenge ahead, and our products will be a key to addressing it. Our nation is aging. Every day, 10,000 Baby Boomers reach age 65, and this will continue for 17 years.

 Americans will continue to live longer in the future. Economist and Nobel Laureate Robert Fogel predicts that half of Americans in their 30s today will live past age 100.

 One gerontologist said that the first hundred and fifty year old person has already been born.

 Americans are living longer. But are they saving to pay for a longer retirement? No. Half of America’s pre-retirees have saved enough to last them only 16 months in retirement.

 Do they simply become totally dependent on Social Security? If you think Social Security is stretched now, what does that do? Do you see the important role that this industry must play? Why was 65 chosen as the retirement age? The answer dates to the 1880s, when German Chancellor Otto Von Bismarck established the first state pensions.

 During Bismarck’s time, few Germans reached age 65, so he knew he was not burdening the government financially. In 1935, our Social Security System adopted age 65.

 If we used Bismarck’s model today and created a new retirement system, the age when you would start receiving benefits… would be 78. We are living longer. In 1997, the mortality charts only went to age 85. In 1998, they went to age 100. Today, they extend to age 120.

 Let me conclude with this. I’m energized, I believe in this industry. Who else stands next to the individual and the family in the toughest of times – when somebody dies to soon, or they live beyond their income.

 My goodness – what happens to a lifetime of dignity if you surpass your income and you only have what the government provides? We represent a noble industry, because we help people maintain their dignity.

 One of the greatest leaders of the 20th century, Winston Churchill, said this about the insurance industry: “If I could I would write the word insure over the doorway of every cottage because for an investment so small, you can protect a family from being smashed up forever.”

 That is our calling. That is our cause. And again, just outside, you see why we are needed, now more than ever.

 So bless you in your work, it’s a calling, and God bless all of you.