“The property and casualty insurance industry has a thirty-year track record of state-based resolution proceedings for failed companies coupled with the enhanced protection of policyholders through the guaranty fund system,” the companies wrote in the letter. “Any federal resolution mechanism should recognize this system and exempt insurers.”
The coalition firms are: The ACE Group, The Allstate Corp.,
The Chubb Corp., CAN, Liberty Mutual, Nationwide Insurance, State Farm Insurance, The Travelers Companies Inc., USAA Property and Casualty Insurance Group, W.R. Berkeley Corp. and Zurich Financial Services Group.
“I think the CEOs felt it was critical for them to pull themselves together to create a unified voice,” said Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA).
Insurers have been quieter than banks during the yearlong congressional debate over new financial legislation. But as senators inch toward marking up legislation in the Banking Committee, they are carving out a much larger presence in Washington.
Insurers, among the largest lobbying forces in Washington, are concerned that they’re being portrayed in the same light as large banks and Wall Street firms that suffered major losses during the crisis.
While hundreds of banks and General Motors and Chrysler received bailout money from the $700 billion rescue package, the large insurer AIG has been Exhibit A in the bailout.
AIG’s troubles stemmed from risky trades on financial derivatives contracts rather than more traditional forms of insurance business.
Proposals under debate in the House and Senate may draw in insurance companies to help recoup money from the $700 billion bailout as well as help pay for future costs to wind down failing firms.
“You can’t slot us into a bank regime,” said Jason Schupp, head of regulatory affairs at Zurich.
“We have concerns that as an industrywe will be sideswiped,” said Paul Mattera, chief public affairs officer at Liberty Mutual.
Insurers are concerned that there is not enough discussion about how potential regulations would fall on their industry because so much of the discussion has centered on banks.
“Our companies do not pose systemic risk,” the companies wrote in their letter.