PCI Urges Congress Towards Cautious Financial Reform

The Property Casualty Insurers Association of America (PCI) is asking Congress to take a cautious approach to the financial reforms outlined in the U.S. Treasury’s proposal. PCI is concerned with addressing all of the potential problem areas and avoiding the consequences that may not have been intended by the new policy.

According to a statement issued by PCI, the Treasury deserves much credit for its suggestions regarding the need for added authority to deal with any failing, and systemically risky financial organizations that may not be under regulatory constraints.

Still, the PCI has its share of concerns. It urges Congress to take a careful, deliberate hand to restructuring so that both consumers and the market place are adequately protected. In particular, the association wished to ensure that reform plans would not create an imbalance among companies and upset completion in the industry.

PCI has also voiced its concerns regarding an aspect of Treasury’s proposal that would allow the FDIC to acquire monies or capital from insurers in various holding companies for the purposes of maintaining solvency for other companies.

David Sampson, PCI’s president and CEO, highlighted this concern in the following remarks, “We are very concerned about the potential for harm to consumers and the marketplace. 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.”

Despite PCI member’s pleasure with the Treasury’s involvement, there are still worries about their approach. It focus on controlling systemic risk may be too broad. The majority of normal insurance activities pose only a negligible amount of risk, let alone systemic risk. Any proposal must account for variable in the marketplace and determine courses of action to regulate the presence of systemic risk accordingly. A nuanced plan is preferable to one that tries to make a standard procedure for every case, such as provided by the insurer’s organizational structure.

The Property Casualty Insurer’s Association of America has expressed its readiness to work in concern not only President Obama’s administration, but also congressional leaders and members of the financial services sector. The goal is providing decent solutions that offer investors a renewed sense of confidence in the marketplace and provide sound preventative measures to avoid a subsequent financial crisis.