• The bill contains a provision allowing insurance agents to become licensed at the federal level if most states have not agreed to honor other state licenses within five years; in apparent reaction, the NAIC is expediting the development of its uniform agent licensing model act.

• ACLI CEO Carroll Campbell praised Congress and stated that "this bill will strike down barriers separating the insurance, banking, and securities industries that have existed since the Great Depression, allow us to compete with one another on a level playing field, and allow the formation of diversified financial service firms that can provide a wider array of products and services to customers."

• Some predict the financial service reform bill's biggest impact is likely to be on life insurers, whose steady business of taking in deposits and investing them is attractive to banks, which are also eager to gain access to new customers. The bill is likely to result in an increase in the pace of industry mergers, particularly in insurance.

• While financial services reform should make things easier for banks to sell insurance, they will no longer be able to use the Barnett decision to challenge state restrictions and can create new restrictions. This may be a problem, but The Association of Banks-in-Insurance calls the provision necessary for compromise.

• Moody's predicts the changing competitive environment and consumer demographics, as well as the arrival of other financial services companies, could present long-term trouble for insurers. These companies, which have expertise in marketing, brand management and technology, could be a serious threat to life insurance agencies. Their recommendation? Insurers who merge and acquire could survive.

• Despite the reform bill hoopla and predictions of only 50 insurance companies remaining in the near future, the American Banker reports that many banks have failed in their efforts to sell life insurance. This is especially true in the emerging affluent middle-class market. But don't look for the banks to give up...LIMRA sees a future, but it will take time and patience.

MET SETTLEMENT BLASTED - Back in August, MetLife announced a proposed $1.77 billion settlement over deceptive sales practices. The problem is that the settlement offers mostly free insurance to 6 million life insurance policyholders and 1 million annuity owners who purchased from MetLife between 1982 and 1997, and getting more insurance from a company they feel deceived them isn't making some of the policyholders too happy. One of the law firms representing the policyholders is defending the settlement as "extraordinary." Of course, the lawyers stand to take home in the neighborhood of $122 million, and that's in cash, not free insurance.

NAILBA - Don't forget that the National Association of Independent Life Brokerage Agencies (NAILBA) annual convention will be held in Beverly Hills at the Century Plaza November 4-7. If it is too late to attend, check out live coverage of the event from Broker News Online at http://www.brokernews-online.com. We believe this to be an industry first.

HIGH-TECH TURN - Dow Jones & Co. announced last week that it will add Microsoft, Intel, SBC Communications and Home Depot to the Dow Jones industrial average, the world's most closely-watched index of blue-chip stocks. Reflecting the economy's momentous shift to technology, the four new additions are replacing four "old-line" Dow components: Sears, Chevron, Goodyear and Union Carbide. In addition, for the first time since its inception in 1896, the Dow will now include stocks not listed on the New York Stock Exchange (Microsoft and Intel trade on the Nasdaq stock exchange).

"BEAT THE STREET" - Aetna announced that its 3^rd quarter earnings jumped 32% from a year earlier, easily surpassing Wall Street predictions. The company's stock, however, was down, at least partly due to an SEC investigation of the company's accounting for recent acquisitions, including its $1 billion purchase of Prudential Healthcare. The company also announced that it was granted approval by the Office of Thrift Supervision to organize a federal savings bank to offer trust services to clients.

THE TROUBLE WITH LTC - The courts gave tentative approval to a $14,700,000 settlement involving long-term care insurance. The companies involved are Commonwealth Life and Acceleration Life...appropriately named since some policyholders saw their premiums rise 629% in ten years, topping out at more than $8,000 per year. We told you LTC could be dangerous!

THE FUTURE OF HEALTHCARE FINANCING? - There appears to be a growing trend toward healthcare reform that would grant each American a tax credit to be used to help pay for health insurance they select. This concept seems to be gaining support on both sides of the political spectrum, as well as among businesses. Many businesses are growing weary of being in the middle...footing much of the bill for employee's health insurance, and yet being on the receiving end of employees' displeasure with the coverage provided. The AMA has now come out with a similar proposal, published in a recent issue of The New England Journal of Medicine.

BURIAL VALUE - A class-action lawsuit has been filed in Florida against American General Life & Accident Insurance Company, alleging unconscionable insurance practices in the sale of burial life insurance policies. The complaint claims AGLA has taken advantage of the poor and minorities by selling overpriced and inferior life insurance in the form of burial insurance. Florida Insurance Commissioner Bill Nelson supported legislation that would have required burial insurance companies to inform their policyholders of the total amount they have paid in premiums. While this legislation was opposed by the insurance industry and was defeated in the legislature, we don't believe this problem will go away anytime soon.

SCARY - According to a survey conducted by the Consumer Federation of America, a large number of Americans exhibit what amounts to financial ignorance. A majority of low- to middle-income Americans feel they have a better chance of winning a lottery than of saving and investing enough to accumulate $500,000 over a lifetime. Excluding the value of their homes, half of the nation's households have accumulated less than $1,000 in net financial assets and millions of Americans are spending as much as they make (if not more). Not surprisingly, family wealth is closely associated with family income, but because they don't appreciate the value of investing, many low- to middle- income Americans aren't taking advantage of the widely available ways to accumulate wealth.

AS WE PREDICTED - Lawsuits over selling practices and interest crediting may soon be the new "litigators' landslide." A U.S. district court has decided to allow a class-action lawsuit involving LifeUSA, saying there is "enough evidence that the defendant misrepresented the terms and conditions of the annuity contracts, their interest and payout rates and procedures both prior to their formation and following the plaintiffs' purchase to warrant the submission of these claims to the jury." LifeUSA had argued that the agents who sold the annuity policies were acting as agents of the insureds, not of the company and, therefore, the company was not liable.

HEADACHES CONTINUE - Still dealing with the fallout from the $1.2 billion class action suit it lost in October, State Farm now faces another public relations headache. On Friday, a group of current and former State Farm agents gathered at the National Press Club Building in Washington and called on Congress to investigate the company, charging that State Farm discriminates against minorities and abuses both policyholders and agents. The company denied the allegations, saying they came from "a cadre of disgruntled current and former agents, some of whom are involved in litigation" against the company.

BEST DEAL - A.M. Best Co. is now providing its Best's Ratings and insurer profiles on the Internet for free. You can also purchase a more comprehensive "Best's Company Report." The company report contains the same information found in the Best's Insurance Reports publications. Check it out at http://www.ambest.com. Duff & Phelps Credit Rating Co. (DCR) also announced that its ratings and insurance claims paying ability-related research is being made available, free-of-charge, on its Web site, http://www.dcrco.com.

CAPITAL GAINS WARNING - It's the time of year when investors who are considering a large purchase of mutual fund shares prior to the end of the year should first check the fund's "distribution calendar." Since mutual funds typically declare income dividend and capital gains distributions in December, there can be unpleasant tax consequences associated with mutual fund purchases made later in the year, unless the fund is held in a tax-qualified plan.

ANOTHER YEAR-END WARNING - Annual exclusion gifts of $10,000 per beneficiary are an effective part of many estate plans. When these gifts are made by check, however, they should be made in sufficient time so that the beneficiaries are able to cash the checks in the year for which the exclusion is sought. Otherwise the gift is not complete prior to the end of the year and the exclusion for the current year is lost.

HYPOTHETICAL HYPOTHETICALS - Companies selling VUL need to be using realistic hypotheticals and manage client expectations. Not to do so may be inviting trouble in the future when client expectations are not met. In the National Underwriter, James B. Nisbet III urges the industry to provide realistic hypotheticals and develop policies that will not lapse when the market downturns. If you are selling VUL, we encourage you to make certain your clients understand the risk of a market downturn...the lawyers may be waiting!

PROSPECTING CAN BE FUN! - Here are a few unique prospecting ideas from Pamela Yellen, CEO of the Prospecting and Marketing Institute: Attach some Tylenol to a letter that reads, "I'm about to solve some of the biggest headaches in your business"; Send a letter with a shoe in a shoebox stating, "I just wanted to get my foot in the door"; Send a canoe paddle and a letter reading, "Has your financial advisor sent you up the creek without one of these?"

TAX BREAKS RENEWED - The Senate on Friday passed a bare- bones tax measure renewing some expiring tax breaks, including the "family tax credits" AMT relief for middle- income taxpayers and the business research and development tax credit. You'll be glad to learn that Senator Roth of Delaware (a large poultry-producing state) was able to insert into the bill a tax credit for companies that use poultry waste to make electricity. Once the House passes its version of the legislation, the two versions will go to conference committee.

INVESTOR SURVEY - According to a survey of investors sponsored by Putnam Investments, about 75% of individual investors say they "rely on professional financial advisors to help them work toward their long-term financial goals." The survey appears to show that investors appreciate the value of both financial advisors and the Internet, using advisors to help them understand their individual situations and how to achieve their longer-term goals, while using the Internet to keep track of the investments they've made with the assistance of an advisor.

KISS OF THE SPIDER(WEB) WOMAN - Richard Weber has an article in the latest Life Insurance Selling about how the Internet could prove to be the insurance industry's biggest challenge. Not only is the agent population shrinking, but due to previous poor service, many clients are also turning away from agents. Many young, affluent prospects say they prefer alternatives to the traditional agent. Agents who have good standing with their existing clients need to develop their own Web site that provides customer service, information about the products available and an e-mail link to the agent. We agree and to see just how easy and inexpensive it is to create a service and knowledge-oriented site, check out http://www.profiles.com/fsonline.

UP 2.4% - Social Security recipients are due to receive the biggest cost-of-living increase in three years. A recent spike in energy prices is the reason given for the 2.4% increase in benefits, almost double 1999's 1.3% increase. The average retiree will receive an additional $19 per month beginning in January. Working Americans will see their maximum earnings subject to the Social Security payroll tax increase to $76,200 in 2000, up from $72,600 in 1999. In another increase, the standard mileage rate for business driving will increase to 32½ cents per mile in 2000, a 1½ cent increase from the 1999 rate.

FROM BLACK HELICOPTERS TO BLACK BOXES - This was reported in the Insurance-Portal.com newsletter. Maybe it is "tongue- in-cheek," maybe not. Here is the text; you be the judge: "Progressive Insurance is reported to have patented a plan using onboard sensors to track policyholders. The sensors send a regular report to company computers for analysis. Information being relayed includes speed, location, what routes are taken, use of seatbelts or signaling before turning...and even what radio station you listen to. Officials at Progressive say the 'black boxes' have already been placed in several hundred policyholders' cars. They claim it's a way for them to potentially offer cheaper auto insurance."

LET THE SUN SHINE IN - That's the idea behind making the public disclosure forms (Form 990) that more than 200,000 charities must complete available on the Internet. A review of these forms offers an instant look into spending patterns, executive pay and other information that, now readily available to the public, may cause charities to improve their operations. Check out your favorite charities at the National Center for Charitable Statistics site (http://nccs.urban.org).

PETS ONLINE - InsWeb (http://www.insweb.com) is covering all the bases. Cats and dogs can choose (with a little help from their owners) from three insurance plans offered online by Premier Pet Insurance.