The National Association of Insurance Commissioners (NAIC) raised concerns regarding the proposed application of “one size fits all” capital rules on thrift and bank holding companies engaged in insurance activities.
NAIC President and Florida Insurance Commissioner Kevin McCarty testified on behalf of US insurance regulators, stating that the prospect of bank-centric regulatory rules being imposed on insurance groups is problematic.
“It is critical that the regulatory walls around legal entity insurers that have successfully protected policyholders for decades not be jeopardised.”
The NAIC has submitted comments to the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency on proposed capital requirements to be applied to thrift and bank holding companies.
“We fear the same overreliance on capital could become a reality in our sector, with no diversity of regulation to mitigate the wrong incentives or prevent systemic risk taking,” added McCarty.
“The existence of global capital standards in the banking sector did not prevent the last crisis and did little to prevent large institutions from becoming larger while chasing each other off their own fiscal cliff.”
The hearing, titled “Examining the Impact of the Proposed Rules to Implement Basel III Capital Standards” was an opportunity for financial regulators to address concerns with the proposed rules. The subcommittee heard testimony from a number of financial regulators in addition to McCarty.
