NU Online News Service, Nov. 5, 3:40 p.m. EDT
Republican takeover of the House will likely put an end to efforts to curb use of credit scoring as an underwriting tool by property and casualty insurers, according to an industry official.
Ben McKay, senior vice president, federal government relations for the Property Casualty Insurers Association of America, suggested that the end of the Democratic majority in the House Financial Services Committee means there is little likelihood that restrictions on the use of credit scoring as an underwriting tool will be imposed.
House Democrats, led by Rep. Luis Gutierrez, D-Ill., had pushed for both legislation and Federal Trade Commission action on credit scoring.
"Such controls would have made it more difficult for us to price our products," Mr. McKay said.
An industry analyst added the Republican takeover also means that Bermuda insurers are probably off the hook on a potential tax hike sought by domestic property insurers.
Sam Leaman, financial analyst at Washington Analysis, said the proposal by Rep. Richard Neal, D-Mass., to tax offshore insurers "is dead."
He stated, "The Bermuda insurers will not have to worry about paying more taxes."
Insurer representatives also said the Republican victories on Election Day could give insurers a "seat at the table" on federal government involvement in the insurance industry.
Under the Dodd-Frank bill, the Financial Stability Oversight Council includes provisions that allow federal regulators to monitor insurance companies and it is gearing up to undertake that role.
The law also created the Federal Insurance Office, and the Treasury Department has requested applications for people to head it.
Mr. McKay said the industry is likely to ask the new Republican-controlled House to seek to limit federal oversight of property and casualty insurance companies.
"We now have a chance to participate in the Dodd-Frank act implementation because now there is a question whether dual regulation is necessary–whether it is a job-killer or a job-creator," Mr. McKay said.
Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), said implementation of financial services reform will be AIA's most immediate priority.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.