Posted on 18 May 2009
David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), on Friday issued the following statement in response to the news that life insurers will receive $22 billion in federal rescue funds:
“We recognize it is a difficult job for the Treasury Department to solve our nation’s financial crisis while minimizing the moral hazards stemming from federal intervention. We hope Treasury will tread carefully and take steps to ensure this funding does not give any of these insurers’ property casualty divisions an artificial competitive advantage over fiscally sound property casualty companies who do not need federal rescue funds.
"If Treasury's funding of life insurers is used to prop up the companies' ability to retain unsustainable short-term market share in their other lines of business such as property casualty insurance, that would undermine fair competition and the overall health of the industry. The results for consumers and taxpayers would be more risk, higher costs, less competition and an increasing reliance on government intervention and resources.
“PCI, which represents the broadest cross-section of insurers of any national trade association, has eschewed federal assistance. Despite the challenges of this economic downturn, our members remain the safest and strongest financial sanctuary in the current storm. Property casualty insurers have behaved responsibly and continue to be generally well-capitalized and managed, providing sound and secure products to consumers. In addition, we are highly regulated at the state level for solvency. We believe that such government intervention would actually harm consumers and the vast majority of responsible insurers. We believe consumers benefit in the long run much more from free and open competition.”