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Testimony of Tracy Whitaker, Homesteaders Life Company, in Support of HB 6261 (2022)

Summary

This is testimony in support of HB 6261, on pre-need funeral insurance, from Tracy Whitaker, Vice President, Legal/Compliance and Associate General Counsel of Homesteaders Life Company, addressed to Chair Calley and the House Rules and Competitiveness Committee. Whitaker says Homesteaders stopped selling life insurance products in the state of Michigan on December 31, 2021. She says the sole reason was the requirement that growth on a policy funding a pre-need funeral contract equal the Detroit Consumer Price Index, which she says Michigan alone ties to a CPI. She says the Detroit CPI stood at 8.6% as of August 2022 and that the company's investments grew at less than half that rate. She says Homesteaders paid over $210,000 in premium taxes to the state the prior year and will not this year.

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“Testimony of Tracy Whitaker, Homesteaders Life Company, in Support of HB 6261 (2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-09-15-testimony-rule-2021-tracy-whitaker-47427-f697d58570/, SHA-256 d9f240d7bae81f0b9b4509814a1a949cb644bcd1c014af88c0e5efc87bbe9bc3.

Full text

                          SUPPORT FOR HB 6261
                      PRE-NEED FUNERAL INSURANCE

                                         Tracy Whitaker
                 Vice President, Legal/Compliance & Associate General Counsel
                                  Homesteaders Life Company

Thank you Chair Calley and members of the House Rules and Competitiveness Committee for
the opportunity to testify in support of HB 6261.My name is Tracy Whitaker and I am the Vice
President, Legal/Compliance, and Associate General Counsel for Homesteaders Life Company
who has been in business for over 117 years. We are also a member of the National Alliance of
Life Companies. Homesteaders is one of the few insurance companies that sell life insurance to
fund pre-need funeral contracts.

Homesteaders made the difficult decision to cease selling life insurance products in the state of
Michigan on December 31, 2021. We are one of the latest in a line of insurance companies that
have ceased selling insurance products to fund preneed funeral contracts in Michigan. The sole
reason for our departure was the requirement to apply the growth on an insurance policy
funding a pre-need funeral contract that is equal to the Detroit Consumer Price Index. Michigan
is the only state that ties the rate of growth to a CPI. Insurance companies operate under many
investing and reserving rules, and currently investment return rates cannot meet or exceed the
current Detroit CPI at 8.6% as of August 2022. In fact, our investments have growth of less than
half that percentage.

Pre-need insurance products cover funeral costs and ease the financial and decision-making
burden for families at a very difficult time. When insurance companies like Homesteaders cease
selling policies there is harm to everyone. The consumer’s choices of products that may meet
their needs is severely limited. It also removes the competitive market that keeps insurance
premiums lower for consumers. When there are fewer choices, funeral homes are no longer
able to make a decision on what insurance products to sell based on what is best for their
business. They only have one or two options.

The state of Michigan is also harmed when pre-need funeral insurance providers leave the
state. Homesteaders and other insurance companies like Homesteaders pay premium taxes
that go to the state. When insurance companies stop selling products no further premium
taxes are paid. As an example, Homesteaders paid the state of Michigan over $210,000 in
premium taxes last year. Unfortunately, that will not happen this year.

Pre-need funeral insurance offers options for families and a number of providers offer a
competitive market. In addition, our providers pay taxes and contribute to Michigan’s
economy. Thank you for the opportunity to support HB 6261 and we urge your support and
passage of this important legislation so Michigan is no longer an outlier in this industry. I am
happy to answer any questions.

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