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PCI, AIA Caution FDIC Against Obstructing State Insurance Regulation

Two property and casualty insurance company trade groups are advising the Federal Deposit Insurance Corporation (FDIC) to defer to state insurance regulators when involved in...
November 30, 2010

Two property and casualty insurance company trade groups are advising the Federal Deposit Insurance Corporation (FDIC) to defer to state insurance regulators when involved in the resolution of a systemically risky insurance company. The comments came in letters from the Property Casualty Insurers of America (PCI) and the American Insurance Association (AIA). They deal with a provision of the Dodd-Frank financial services reform law that gives the FDIC the authority to participate in resolving systemically risky insurance companies. PCI said the FDIC should exercise its resolution authority in a manner that respects state jurisdiction over the resolution of insurance companies.

"The AIA is concerned that the FDIC's broad discretion to provide funding and take liens on any assets of a covered insurance company or covered subsidiary or affiliate could conflict with the resolution plans of the relevant state authority and be inconsistent with what the state authority believes is in the best interests of policyholders," its letter states, adding that the FDIC should take a lien only on the assets of the entity to which the FDIC made an advance, thereby ensuring that the assets of a covered subsidiary or affiliate are not impaired.

Click here to read PCI, AIA Caution FDIC on Obstructing State Regulation (National Underwriter 11/24/10)