NU Online News Service, Jan. 19, 3:10 p.m.EST

The president of the National Association of Mutual InsuranceCompanies says the “Volcker rule” contains “ambiguities” that couldpotentially inappropriately impact property and casualty insurersthat have banks or thrifts.

Charles Chamness, NAMIC president/CEO, says in a statement thatthe law the rule implements provides for a statutory exemption foran insurance company acting on behalf of its general account.

“While it is clear that the statutory intent was not to impactinsurers, the proposed rulemaking demonstrates that there remainambiguities and potential problems for members of our industry thatare affiliated with an insured depository institution,” Chamnesssays.

“We are working to provide comments on the Volcker Rule to therelevant agencies that will make clear that the insurance exemptionshould be widely construed and that with it in place, no newcompliance structures be required by these insurers,” he adds.

In recent testimony before a House panel, Scott Evans,executive vice president, TIAA-CREF made comments consistent withNAMIC's concerns.

He said the problem with the proposed rule as currentlystructured is that it does not expressly allow the general accountof an insurance company to hold an ownership interest in a “coveredfund.”

In addition, Evans said, the proposal defines covered funds in away that essentially designates all private-equity funds as coveredfunds.

“This is an area of concern not only to TIAA-CREF, but to manyin the insurance industry since private-equity investments arewidely utilized by insurers' to diversify investment portfolios,both for the benefit of their general accounts and on behalf ofcustomers,” Evans said.

The Volcker rule is contained in the Dodd-Frank financialservices reform law. It would reduce the ability of the nation'slargest financial institutions to make large investments that couldproduce significant losses.

It was proposed by Paul Volcker, 84, chairman of the FederalReserve Board during the Carter and Reagan administrations, whilehe was serving as an advisor to President Obama in 2009-2010.

In testimony, Federal Reserve Gov. Daniel Tarullo saidregulators are having problems writing the rule in such a way thatit didn't restrict permitted trades and yet caught prohibitedones.

He said the agency is “more than open” to alternatives to itsproposed approach, saying regulators are striving to avoidcomplexity.