Twenty-four U.S. senators sided with the insurance industry and called on top federal bank regulators to exclude insurers from new capital requirements aimed at banks, arguing that having insurers meet those requirements could inadvertently hurt policyholders, retirees and those who are working to increase their savings.
The bipartisan group of senators said that the new capital requirements do not account for the "distinct nature of the insurance business," nor do they reflect the risk-based capital requirements insurers must meet under the U.S. state-based regulatory regime for insurers. The senators made those comments in an
The letter was sent ahead of the
"While robust capital standards are a critical component in any prudential supervisory regime, applying a bank-centric regulatory capital regime to insurance entities creates serious challenges for insurance companies, and potentially policyholders," the letter said.
Under the wide array of financial regulations stemming from the Dodd-Frank financial reform act, the Fed was charged with deciding whether to adopt the
The senators, led by Sen.
The letter went on to say that bank regulators should also consider the timeline for implementing the new rules under Basel III, which includes various deadlines for different capital regulations that range from 2015 to 2018. The senators said regulators should give insurers enough time to transition to any new capital requirements to minimize disruptions to their businesses and their policyholders.
Industry representatives praised the senators' letter, saying that
"With the comment period soon coming to an end, it is compelling to see this large bipartisan group of senators weigh-in with financial regulators on what
In an earlier comment letter sent to Bernanke, Curry and Gruenberg, the ACLI said the state risk-based capital requirements recognizes "that premiums are collected in advance and invested ahead of anticipated claims, that insurers have relative predictability of those claims, and that products have safety mechanisms such as surrender charges to protect against illiquidity."
At least one large insurance company has already been caught up in the new capital requirements.
In June, Best's News Service reported that the Fed gave
In addition to Brown and Johanns, the letter was signed by Sens.
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|Source:||A.M. Best Company, Inc.|