NU Online News Service, March 3, 10:09 a.m. EST
WASHINGTON–A new insurers' coalition has written the Senate Banking Committee asking that property and casualty carriers not be included in a measure regulating systemic risk in the financial services sector.
The letter to Sen. Christopher Dodd, D-Conn., the banking committee chairman, was sent as signs emerged that bipartisan financial services reform legislation could be introduced in the Senate this week.
According to Senate sources, that would set the stage for Senate Banking Committee action on the legislation sometime next week.
"Property and casualty insurers have been an oasis of relative stability, weathering the crisis well without presenting any risk to the broader financial system," the letter said.
P&c insurance operations are generally low-leveraged businesses, with lower asset-to-capital ratios than other financial institutions, more conservative investment portfolios, and more predictable cash outflows that are tied to insurance claims rather than "on demand" access to assets, the coalition wrote.
They said also that "property and casualty insurers are already subject to stringent regulatory capital, investment and product standards that focus on maintaining their financial health and strength."
For these reasons, the coalition said, the property and casualty industry should not be subject "to heightened or duplicative solvency supervision at the federal level, nor should bank-centric financial regulation be applied to our industry."
"Further, any additional federal systemic risk oversight for our state-regulated industry could end up creating the very regulatory gaps this legislation is trying to address in other financial services sectors," the letter warned.
Insurers who sent the letter said their coalition members represent nearly half of the entire property and casualty industry and conduct business in all 50 states and the District of Columbia.
They also said they underwrite more than $203 billion in total premiums and cover at least 62 percent of the homeowners market; 51 percent of the personal auto market; and 32 percent of the commercial lines market.
The legislation that has drawn their concern is being drafted by Sen. Dodd and Sen. Bob Corker, R-Tenn.
According to congressional staff, the two have crafted legislation that will win the support of the committee and have enough Republican votes on the Senate floor to gain 60 votes, that can overcome any efforts by Republicans to block the legislation with a filibuster.
The two senators are moving ahead despite stiff opposition from Sen. Richard Shelby, R-Ala., ranking minority member of banking panel, congressional sources said.
Sen. Shelby has aligned himself with Sen. Mitch McConnell, R-Ky., Senate minority leader, in an effort to persuade Sen. Corker to refuse to support such legislation, those sources said.
Those signing the letter include the chairman and CEOs of Allstate, Ace, CNA, Travelers, Chubb Corp., USAA, Berkley Corp., Liberty Mutual, Nationwide Insurance, State Farm and Zurich.
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