Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Insurance groups hail House approval of capital standards bill

Reprints
Insurance groups hail House approval of capital standards bill

Insurance groups are welcoming the House's approval on Tuesday of legislation that would give the Federal Reserve more leeway in how it determines which accounting standards to use in determining minimal capital standards for insurers under its jurisdiction.

The Insurance Capital Standards Clarification Act of 2014—H.R. 5461—calls for amending the Dodd-Frank Act Wall Street Reform and Consumer Protection Act 0f 2010 to give the Federal Reserve flexibility to set capital standards for insurance companies. The Federal Reserve has held that it must use Generally Accepted Accounting Principles, which are used in banking, to measure insurer's capital adequacy rather than the Statutory Accounting Principles used by state insurance regulators. The House bill — like Senate legislation approved earlier this year — allows the use of statutory accounting principles.

Insurers have worried that insurance companies underwriters that fell under Fed supervision as systemically important institutions under Dodd-Frank would be subject to what they regarded as bank-centric rules.

“The legislation passed by the House today provides a measure of common sense for the Federal Reserve and any insurance companies placed under its supervision,” said Jimi Grande, senior vice president of federal and political affairs in the National Association of Mutual Insurance Cos.', Washington office in a statement.

“Today's action by the House is a common-sense solution to a technical issue within Dodd-Frank,” said Charles Symington, senior vice president of external and government affairs at the Alexandria, Virginia-based Independent Insurance Agents & Brokers of America, in a statement. He noted that the agent group “has long supported the premise that banking and insurance are different and therefore should have distinct regulatory standards.

The Washington-based American Insurance Association “is pleased that the House has passed legislation which reflects the bipartisan 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 AIA President and CEO Leigh Ann Pusey in a statement.

The House bill, however, is not identical to the Senate measure, which means that differences between the two bills unrelated to the capital standards provision must be reconciled.

“We've now seen both chambers of Congress approve this legislation with virtually no opposition,” Mr. Grande said in his statement. “In what little time they have left, we hope that leaders of the House and Senate can negotiate the issues unrelated to capital and accounting standards for insurers attached to this bill and resolve this issue once and for all.”

Read Next