Insurance companies and trade groups—both property and casualty and life—are pulling out all the stops in an effort to thwart or delay the Federal Reserve Board's efforts to impose consolidated regulation of them through its new authority to oversee thrift holding companies.
For example, in a meeting with Federal Reserve Bank of Chicago officials last month, American Council of Life Insurance (ACLI) staffers asked the Fed not to impose new capital standards on thrift holding companies owned by insurers.
The ACLI argued, in comments at the meeting and in statement submitted at a House hearing, that the Fed proposal inappropriately applies bank-centric standards and methodologies to insurance companies.
And, the ACLI asks that implementation of the rule for insurers be delayed until July 21, 2015.
The ACLI statement submitted at the hearing said that, The ACLI is "very troubled" by the June 7 rulemaking which applies bank-centric standards and methodologies to insurance companies.
The ACLI request at the meeting with Chicago Fed officials asks that insurers get the same transition treatment under the Dodd-Frank financial services reform law accorded to U.S. subsidiaries of foreign bank holding companies which have assets of more than $50 billion under a different provision of Dodd-Frank.
And, in a statement submitted at the House hearing, the Property Casualty Insurers Association of America (PCI) even complains about the Fed decision to ask property and casualty insurers with thrift subsidiaries to provide certain information to the agency about their thrifts.
On May 1, The National Underwriter disclosed that the Fed, through a provision of Dodd-Frank, had asked staffers at its Chicago and Boston banks to develop metrics needed to evaluate the financial health of insurers who may come under consolidated Fed supervision because they own thrifts.
"PCI has numerous insurance members with small thrifts that just received several hundred pages of proposed capital rules from the federal banking agencies," PCI officials said in the statement.
"Just the management and legal staff required to understand these new rules is taking significant unmeasured time and resources away from new business and development and growth," the statement said.
"These industry costs will inevitably have an impact on the cost of products for consumers and could also have a negative impact on employment in the insurance industry as well," the statement said.
"Especially at this time, when our nation faces significant economic challenges and unacceptably high levels of unemployment, the Federal government should not increase economic burdens on consumers by imposing new financial regulatory burdens without demonstrating significant need or gaps," the statement said.
While industry officials argued at the hearing and in numerous filings that insurers did not contribute to the 2007-2009 financial crisis, consumer advocate Birny Birnbaum disagreed.
In his comments, Birnbaum focused on activities at the holding company level, which the June 7 proposal seeks to address.
