ACLI Submits Statement in House Financial Services Subcommittee Hearing (with Lofchie Comment)

The American Council of Life Insurers ("ACLI") submitted a statement to the House Financial Services Housing and Insurance Subcommittee regarding a hearing titled "The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers."

According to ACLI, the Board of Governors of the Federal Reserve System ("FRB") is developing insurance capital standards that are "likely to have significant impacts on life insurance companies and the families who depend on them for financial and retirement security."

ACLI stated that, in order to ensure the best outcome for policyholders, the FRB should (i) "fully implement" the Insurance Capital Standards Clarification Act, (ii) develop an insurance capital standard that "is appropriate for U.S. insurers and the insurance business model" and (iii) partner with the other U.S. representatives to the International Association of Insurance Supervisors to "ensure that any international insurance standards reflect the unique strengths of the U.S. system of insurance supervision."

Lofchie Comment: To a great extent, the concerns expressed by the insurance industry about the potential capital rules that could be imposed by the FRB echo those that were voiced by the securities industry about the conduct of FSOC regarding the designation of firms as systemically significant: (i) that the regulatory agency is likely to impose a set of rules that are more applicable to banks than to the industry they're intended to regulate and (ii) that the regulatory agency is more sensitive to global regulators' desire for harmonization than to national considerations.

See:ACLI Statement; Hearing Information.