Posted on 18 Jun 2009
David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), issued the following statement in response to the White House/Treasury proposal for financial services regulatory reform.
“We are pleased and encouraged that the Administration has focused on the problems of systemic risk and explicitly acknowledged that traditional property casualty insurance did not cause the crisis in its initial comprehensive financial services regulatory reform proposal.
“PCI supports targeted reforms and agrees with the need to create a federal systemic risk overseer to help ward off future crises in the financial services sector. Property casualty insurers, who have remained well-capitalized and solvent throughout the current fiscal crunch, do not present a systemic risk and did not cause the existing crisis. Therefore, it is heartening that this plan would not add a duplicative layer of federal regulation at this time to an already successful state system of property casualty insurance regulation that has served consumers well.
“Historically, it is clear that property casualty insurers have performed well regardless of the economic environment. An analysis of historical impairment activity over the last 30 years for major sectors of the financial services industry demonstrates clearly that the property casualty insurance industry has a consistent and low historic impairment rate that is uncorrelated with larger economic downturns. While other financial sectors have shown tremendous variance, the percentage of industry impairments since 1980 in the property casualty insurance sector has never risen above 1.5 percent, and has been consistently close to zero since 2004, even during the current down cycle.
“While today is an important milestone in regulatory reform efforts, we recognize that the debates will continue as details are developed and urge policymakers to not sweep in the property casualty industry. Overall, the state-based system of insurance solvency regulation is successful and has served consumers well. We look forward to working with the White House and the Treasury Department, as well as Congress, in support of a final package that will help prevent a repeat of the current fiscal crisis while maintaining the strengths of the current healthy property casualty insurance marketplace for consumers.”