Insurer groups are welcoming bipartisan legislation that would clarify what accounting standards the Federal Reserve Board can use to determine capital standards for insurers under its supervision.

Under the Insurance Capital Standards Clarification Act of 2014, which was introduced in the Senate as S. 2102 and in the House as H.R. 4510 on Tuesday, the Fed would be required to accept Statutory Accounting Principles as favored by insurers rather than requiring insurers to convert to Generally Accepted Accounting Principles. Insurers have expressed concern that underwriters that fell under Fed supervision as systemically important institutions under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 would be subject to what they regarded as bank-centric rules.

American Insurance Association President and CEO Leigh Ann Pusey issued a statement praising the legislation.

“This legislation reflects the consensus in Congress and at the Federal Reserve Board that there are fundamental differences between the insurance business model and the banking business model,” said Ms. Pusey in her statement. “The bill clarifies the Federal Reserve Board's ability to tailor appropriate insurance-based capital standards for the insurance companies under its supervision.”

“With the introduction of legislation today, Congress is making it clear that one size does not fit all when it comes to financial services regulation,” said Jimi Grande, senior vice president in the National Association of Mutual Insurance Cos.' Washington office. “Banking and insurance are two very different industries, and trying to regulate one under the same rules as the other would only lead to chaos for companies and increased costs for consumers.”

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The Property Casualty Insurers Association of America also welcomed the bill.

“PCI has long been advocating against the one-size-fits-all model for regulation, and we are pleased that there is broad, bipartisan agreement to clarify that any capital standards for insurance holding companies with depository institution affiliates are appropriately tailored to insurance,” said Nat Wienecke, senior vice president in PCI's Washington office. “The insurance model is fundamentally different from the banking model, and without this legislation, many PCI member companies that own community banks or other relatively small depository institutions may be forced to quit the banking industry because of the potential regulatory costs and challenges that will be imposed by the Fed.”