Insurance industry seeks carve out from Massachusetts ‘junk fees’ proposal

investmentnews.com:

The insurance industry wants to be carved out of a Massachusetts proposal that targets “junk fees” in product sales, a stance that echoes their opposition to a Department of Labor investment-advice proposal that also has been promoted as a way to combat “junk fees” related to retirement-savings recommendations.

In a separate action, Empower, a major retirement-plan provider, urged the DOL to withdraw its rule in a comment letter filed Wednesday.

Late last month, Massachusetts Attorney General Andrea Joy Campbell released a proposal that prohibits companies from charging hidden fees – or “junk fees” – that deceptively push product sales prices above the level that is advertised. The measure would require a business to disclose the full price, including all fees, interest and other charges.

“These proposed regulations will not only ensure that consumers know what they are actually paying for when buying a good or service, but also level the playing field and market for those honest businesses that clearly disclose their pricing upfront,” Campbell said in a statement.

But certain parts of the proposal are impractical for insurance firms, said a group of insurance trade associations. For instance, a company would violate the proposed rule if it did not disclose the total price of a product prior to collecting a consumer’s personal information.

“Although this disclosure requirement may make sense for other industries, it would undermine the ability of life insurers to properly underwrite, thereby disrupting consumers’ access to financial and retirement security products,” the Life Insurance Association of Massachusetts, the American Council of Life Insurers and the Insured Retirement Institute wrote in a Dec. 20 comment