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WASHINGTON-The Clinton administration's outline for financial services reform leaves numerous questions unanswered for the insurance industry.

The plan, unveiled by Treasury Secretary Robert Rubin last week, calls for allowing affiliations among banks, insurance companies, insurance agencies and securities firms. Insured depository institutions, however, would not be permitted to underwrite insurance other than credit-related insurance. Insurance activities of banks would be subject to "normal state insurance regulations," provided the regulations did not "discriminate" against banks.

The administration proposal would also permit the creation of a new type of financial institution called a "wholesale financial institution" or "woofie," as Secretary Rubin called it. These new entities would not be federally insured, could not accept retail deposits and would be allowed to "engage in any lawful business."

The lack of legislative language spelling out exactly how the plan would work puts insurance observers at a loss.

"This is a framework we can work with, but we have questions like everyone else. The key questions for us relate to holding company regulation, the precise way in which insurance regulators will interact with bank regulators, and how commercial affiliations will be treated as they relate to the insurance industry, which is a heavily regulated financial industry," said David Pratt, senior vp with the American Insurance Assn. in Washington.

Mr. Pratt said that while banks generally would be able to underwrite insurance either through an affiliate or an operating subsidiary, appropriate fire walls and safeguards would be installed so that banks would not enjoy an unfair competitive advantage in such an operation.

"The way the proposal stands, banks could get into the reinsurance business through an affiliate and reinsurers could get into the banking business. It appears to be leveling the playing field, though the details will determine just how level the playing field is," said Francis Bouchard, director-federal affairs for the Reinsurance Assn. of America in Washington.

Joel Wood, vp-government affairs for the Council of Insurance Agents & Brokers in Washington, said the biggest question for agents and brokers is who will be the ultimate authority for determining what constitutes discrimination. Mr. Wood noted that Federal Reserve Chairman Alan Greenspan did not answer that question during testimony before a House panel after the Treasury announcement.

"Clearly, I'm not that downbeat on this," Mr. Wood said. "I think the administration did about as well as they could under the circumstances."