The National Association of Mutual Insurance Companies (NAMIC) is hoping that property casualty insurance companies can be excluded from new legislation that would require an agency to oversee some financial institutions. According to the association, these particular companies do not pose a systemic risk to the U.S. economy and thus should not require specialized regulation.
The Basics of the House Bill
The bill is called the Financial Stability Improvement Act of 2009 and was approved on Friday, Dec. 11. According to the bill, the Financial Services Oversight Council would be formed. This council would have the power to designate financial companies it deems as posing a systemic risk to the overall economy heightened regulation. Also, it would establish a fund that would aid troubled firms after assessing them on a pre-event basis.
NAMIC Wants Exclusion
According to the NAMIC, property casualty insurers do not fall into the category of “systemically significant.” The senior vice president of federal and political affairs for NAMIC, Jimi Grande, says that trying to force insurance companies to operate on the regulations of a bank would cause significant problems.
He noted that insurers already operate under high capital requirements and already have resolution mechanisms such as guaranty funds at the state level. If they were to be included in a pre-event assessment, both insurers and customers would shoulder more burden of failures for non-insurance institutions.
Do you think that property casualty insurance companies should be regulated by the House’s new council?
