The Republican lawsuit targets reinsurance that helps insurance companies provide universal coverage without accounting for pre-existing conditions.
Washington, D.C., (March 11, 2014) — The American Council of Life Insurers (ACLI) submitted a statement for the Senate Banking Committee Subcommittee on Financial Institutions and Consumer Protection hearing entitled, “Finding the Right Capital Regulations for Insurers.”
ACLI is strongly opposed to the application of bank-centric capital standards to life insurance companies. ACLI believes that any consolidated capital standards developed for life insurers should be insurance-based and modeled on the current risk-based capital system (RBC). RBC was specifically designed by state regulators for life insurance companies and is a holistic and comprehensive measure of their unique risks.
The Dodd-Frank Act granted the Federal Reserve Board (FRB) new supervisory authority to regulate non-bank organizations that are affiliated with savings and loan holding companies or are designated as “systemically important financial institutions” by the Financial Stability Oversight Council (FSOC). Several life insurers fall under these new rules.
Section 171 of the Dodd-Frank Act, also known as the Collins Amendment, authorizes the FRB to establish capital standards for these insurance companies. The author of Section 171, Sen. Susan Collins, (R-Maine), is working to ensure the original purpose of her amendment by clarifying that insurance companies should not be treated like banks.
In the absence of FRB action to use its existing authority to develop insurance-based capital standards for insurance companies, the ACLI supports a legislative solution to this issue.
ACLI strongly supports S. 1369, legislation authored by Sen. Sherrod Brown (D-Ohio) and Sen. Mike Johanns (R-Neb.), that would clarify the FRB’s authority to develop insurance-based capital standards for the insurance companies under its supervision. ACLI also supports similar efforts in the House led by Rep. Gary Miller (R-Calif.) and Rep. Carolyn McCarthy (D-N.Y.). Finally, ACLI appreciates the leadership of Sen. Collins, who has consistently supported the application of appropriate capital standards for insurers.