PCI appreciates the thoughtful work by Treasury and the need for enhanced authority to resolve failing, systemically risky financial entities that are not otherwise regulated. However, PCI has a number of critical concerns and urges Congress to proceed in a thoughtful, thorough manner to prevent negative effects on consumers and the marketplace. PCI underscores the need to ensure that any actions taken provide a level playing field for all companies and not undermine healthy competition.
PCI in particular is concerned about one part of the proposal that would enable the Federal Deposit Insurance Corp. (FDIC) to tap capital from insurers in holding companies and potentially use those monies to prevent insolvencies in other industries.
“Draining capital intended to protect policyholders could potentially undermine an industry that is largely solvent in order to prop up other industries with solvency problems. We are very concerned about the potential for harm to consumers and the marketplace,” said David A. Sampson, PCI’s president and CEO. “We urge Congress to carefully examine this entire proposal and ensure that it does not create unintended consequences, such as potentially undermining a largely healthy industry, and hundreds of millions of consumers, to bail out troubled, excessive risk-taking sectors of the economy.”
While PCI is pleased that Treasury is weighing-in on the need to regulate systemic risk, it is also concerned that the Treasury approach may sweep too broadly. Most traditional insurance activities pose little or no systemic risk. Specifically, very few lines of property casualty insurance, and few property casualty insurers, pose any significant systemic risk at all. PCI prefers an approach that recognizes this fact, rather than a one-size-fits-all reliance upon the organizational structure of an insurer.
PCI is committed to working with the Administration, Congressional leaders and others in the financial services sector to advance appropriate solutions that restore investor confidence and prevent another economic crisis from occurring.