After FSOC Rule, Industry Maintains P&C Is Not Systemically Risky.
WASHINGTON--Spokesmen for insurance-trade groups insist that when all is said and done, officials of the Financial Stability Oversight Council will support insurers' view that insurance activities by their very nature do not pose a threat to the stability of the U.S. financial system.
J. Stephen Zielezienski, American Insurance Association general counsel, says, "By incorporating risk-related metrics in the process, the final rule reflects improvement over the first proposed rule."
He adds, "AIA hopes that [the FSOC] will use the designation sparingly and apply it only to the companies that pose a systemic threat to U.S. financial stability."
He notes that AIA believes property and casualty insurers should be screened out of the systemically important financial institutions (SIFI) designation since they do not pose a threat to financial stability.
Jimi Grande, senior vice president, federal and political affairs for the National Association of Mutual Insurance Companies, makes a similar point, stating, "To the extent that the final rule is similar to the proposed rule from October of last year, the FSOC seems properly focused on the type of institutions which experienced the most difficulty during the financial crisis."
Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America issuing a statement supporting the final rule.
"The final FSOC rule takes important steps to recognize that traditional home, auto and business insurance activities are not systemically important," McKay says.
He adds that the Dodd-Frank Act appropriately treated insurance very differently than other sectors of the financial services industry.