American Property Casualty Insurance Association
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Contact:

Eileen Gilligan

Phone:

202-639-0497

Email:

Eileen.Gilligan@pciaa.net

 

 

FOR RELEASE ON RECEIPT

May 20, 2014

PCI Member Urges Congress to Enact the “Legislative Proposals to Reform Domestic Insurance Policy”

 

WASHINGTON – Joseph Kohmann, chief financial officer and treasurer of the Westfield Group, testified on behalf of the Property Casualty Insurers Association of America (PCI) before the House Committee on Financial Services Subcommittee on Housing and Insurance on the hearing on the “Legislative Proposals to Reform Domestic Insurance Policy.” The legislative proposals include, H.R. 4510, the Insurance Capital Standards Clarification Act of 2014, H.R. 605, the Insurance Consumer Protection and Solvency Act of 2013, H.R. 4557, the Policyholder Protection Act of 2014, and draft proposals on the Insurance Data Protection Act of 2014 and the Risk Retention Modernization Act of 2014.

“PCI strongly supports the bills the Committee is considering today to clarify Congressional intent regarding the Dodd-Frank Act and we are very appreciative of the leadership of the Committee and the Republican and Democratic bill sponsors,” said Kohmann. “PCI and Westfield support strong regulation. But our growth is being restrained by unintended consequences stemming from an expansion of banking regulation in the Dodd-Frank Act that conflicts with state insurance regulation.”

“PCI and Westfield ask Congress to enact H.R. 4510, the Insurance Capital Standards Clarification Act of 2014. In essence, H.R. 4510 simply clarifies the original legislative intent of Congress in the Dodd- Frank Act that in regulating insurance holding companies with banks or thrift affiliates, the Federal Reserve Board should apply bank capital standards to the banking portion and insurance capital standards to the insurance operations,” continued Kohmann. “A strict application of bank capital requirements to our insurance activities just doesn’t make sense.”

“H.R. 605, the Insurance Consumer Protection and Solvency Act, ensures that resolution of insurance companies and their assets is conducted by insurance regulators, not by a federal banking agency. It would also prevent the Federal Deposit Insurance Corporation (FDIC), primarily responsible for bank resolutions, from using insurance assets to support failing banks.” Continued Kohmann. “Insurers are already responsible for resolving their own failures and pay for guaranty funds in every state to protect consumers. Don’t let insurance policyholder protection funds be used to support risky investment firms and banks.”

“H.R. 4557, the Policyholder Protection Act of 2014, requires federal bank regulators, before transferring assets of insurance companies to banks, to ask the insurance regulator to determine if the transfer would harm the insurer,” continued Kohmann. “This seems like another common sense clarification to limit a regulatory conflict of interest and avoid harming insurance policyholders to support a bank.”

“The proposed Insurance Data Protection Act would provide additional protections for confidential proprietary data shared among insurance companies and government entities, and limit rather extraordinary regulatory subpoena power given to non-regulators,” continued Kohmann. “This will prevent potential future costly data calls by entities who neither supervise our companies, nor are responsible for our solvency.”

“The theme of all these bills is that insurance and banking regulation are fundamentally different. Congress has the opportunity to clarify that regulation of insurance companies and activities should be conducted using insurance standards and supervisors. We appreciate the committee’s work on these bills and would be pleased to work with members of Congress towards their enactment,” concluded Kohmann.

Kohmann’s written testimony is attached. In addition, PCI's written testimony on the draft proposal of the Risk Retention Modernization Act of 2014 is attached.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

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