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Member, Beacon International Group, Ltd.
WASHINGTON—Five property/casualty insurance trade groups sent a letter Tuesday to House Financial Services Committee Chairman Barney Frank, D-Mass., reiterating their concerns about how their industry would be treated under the Financial Stability Improvement Act.
“We believe that any federal proposal to subject financial companies to heightened prudential supervision should start from the premise that property and casualty companies engaged in insurance activities should not be subject to such supervision,” the groups said in the letter about legislation that is under consideration by the committee.
“Because the discussion draft already exempts insurance company subsidiaries from the enhanced resolution authority, the draft should carry that exemption through the rest of its provisions,” they wrote. “In addition, Congress should establish a mechanism that does not improperly assess exempted entities for the systemic failures of others. Failure to do so would generate added costs for the property and casualty industry and consumers, and potentially destabilize a healthy insurance marketplace. Moreover, if assessments are made to recover federal aid to a failing institution with property and casualty subsidiaries, we run the risk of distorting marketplace competition,” the letter says.
“Finally, we are particularly concerned about an amendment to be offered in committee that would subject insurers to pre-event assessments to fund a resolution mechanism. We strongly oppose the idea of pre-funding because it runs counter to our own resolution system, amounts to a tax and exacerbates the problems we have noted above.”
The American Insurance Assn., the Independent Insurance Agents and Brokers of America, the National Assn. of Mutual Insurance Cos., the Property Casualty Insurers Assn. of America and the Reinsurance Assn. of America signed the letter.