P&C Industry Looks to Limit FSOC Authority

It is unnecessary for property and casualty insurance companies to be overseen by the Financial Stability Oversight Council (FSOC) as potentially "systemically significant," and Congress should move to take away that authority, a P&C trade group contends.

In a letter to Congress, officials of the National Association of Mutual Insurance Companies (NAMIC) say passage of three bills sought by state regulators that would severely roll back federal authority to oversee insurance companies should only be the start of legislative action to curb federal oversight of insurance companies.

NAMIC President/CEO Charles Chamness signed the letter and sent it in advance of a Nov. 16 hearing by the subcommittee on "Insurance Oversight and Legislative Proposals."

The three bills supported by state regulators would, respectively, revoke the authority of the Federal Insurance Office and the Office of Financial Research within the Treasury to subpoena information from insurance companies; "explicitly and entirely" exclude insurance companies, including mutual insurance holding companies, from the Federal Deposit Insurance Corp.'s "orderly liquidation authority" for troubled large non-banks; and "preclude" the Federal Reserve from establishing higher prudential financial standards to troubled insurance companies it would oversee as ordered by the FSOC.

Chamness says these three legislative proposals to be considered "represent an excellent first step toward bringing much-needed certainty to insurance markets," but stressed the prevention of new and unnecessary regulation of insurers by the FSOC.