NEW YORK--Any effort to federalize insurance regulation will be met with all out resistance from state authorities, a Washington attorney has told a gathering of insurance executives.
Charles Landgraf, a lawyer in Dewey & LeBoeuf's Washington office, made his comments at an industry conference here.
The 19th annual executive conference for the life insurance industry was sponsored by Dewey & LeBoeuf; Ernst & Young, New York; and Summit Business Media, Erlanger, Ky., parent of National Underwriter.
Mr. Landgraf said efforts to move ahead with federal insurance regulation will receive "push back" from state regulators and state governors who fear loss of regulation as well as premium tax dollars, even though proposals promise not to change the premium tax structure.
"States will fight to the death" arguing that they have a history of protecting consumers--and that is an argument the incoming Obama administration could very well support, he continued. The National Association of Insurance Commissioners, Kansas City, Mo., will argue that insurance has been the least impacted during the current financial crisis, Mr. Landgraf added.
He also discussed the government's Troubled Asset Relief Program, details of which, he noted, are still being worked out.
Mr. Landgraf said it seems clear that in order for an insurance company to apply to the program, it must either have a bank or thrift unit or be in the process of applying to become a bank.
Initial indications are that if a company applies for TARP assistance and wants to use the funds to make an acquisition, it will not necessarily be disapproved but will have to get the nod from the Treasury department, he added.
And, Mr. Landgraf said, what will also be interesting will be whether the federal government will use guarantees to shore up companies in need of capital as well as actual cash infusions.
He also discussed how the crisis could impact insurance regulation since "AIG [American International Group] clearly brought insurance to the forefront."
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