Refuse to demand regulation of insurers to relax the rules

 

Thursday, Mar 05,2009, 1:38:38 PM   Click:

Regulators insurers refuse to relax the rules JEWELLAP MARK Business Writer The Associated Press
BOSTON_Regulators on Thursday denied the life insurance industry calls to ease rules specifying how much money they must set aside to absorb potential losses and pay claims.

The rejection came a day after the part of several life insurers top jumped more than 20 percent after an advisory vote by a committee of the National Association of Insurance Commissioners. The group supported the changes in six of the nine proposals from industry, and urged the other three be dismissed.

But insurers reversed course Thursday from the NAIC's executive committee rejected the request for a vote that was held by teleconference. The industry group American Council of Life Insurers wanted the commissioners to adopt a set of national rules in place, state by state regulation that the industry calls too strict.

"Until now, the insurance industry is in much better condition than most of the rest of the financial services sector of the state because of high solvency, the president of the NAIC, New Hampshire Insurance Commissioner Roger Sevigny, said in a statement. "Simply put, the industry has not made a credible case for which we need to make changes in an emergency, and why these changes should be limited to specific proposals made by the industry. "

The ACLI presented NAIC proposals in a public hearing Tuesday, and opposition from some consumer groups.

After the rejection, Thursday, the ACLI, based in Washington issued a statement on behalf of the President and CEO Frank Keating said the insurance commissioners group had failed to provide uniform guidance to Member States on how to respond to rapidly changing economic conditions and volatility. "

Committees of the NAIC, which represents the Commissioners of the National Insurance will review parts of the industry proposal. But for now, current state law commissioners give sufficient flexibility to provide relief life insurance rules in each case, the organization said.

Susan Voss, the Iowa insurance commissioner and NAIC Vice President, said any further examination of the evolution of regulatory requirements "will follow the NAIC is open, transparent and deliberative process."

The industry is lobbying for changes at a time when many other regulations are tightened in response to the problems plaguing the financial sector, including segments of the insurance industry.

The industry claims that its members take more than necessary to absorb losses and to make good clients on claims. The ACLI says its proposed changes free up $ 25 billion to 30 billion in capital, up 6 percent to 7 percent of life insurers' total adjusted capital in 2007.

Life insurers to maintain capital requirements are so stringent that they can show investors and potential customers that their finances are far less healthy than they really are.

On Wednesday, as financial stocks largely gained on the word of the government's financial rescue plans, life insurers have posted the strongest gains. Shares of Hartford Financial Services Group Inc., MetLife Inc., Lincoln National Corp., Principal Financial Group Inc and Prudential Financial Inc. all rose more than 20 per cent.

Stocks fell sharply Thursday as broader markets declined and that the NAIC has rejected the proposal this afternoon, in his vote. Shares of Hartford Financial Services fell $ 2.31, or 13 percent, to close at $ 15.40; MetLife fell $ 3.24, or about 9.7 percent, to $ 30.03; Lincoln National fell 3 , $ 80, or about 18.4 per cent, to $ 16.84, Principal Financial fell $ 2.64, or about 12.9 percent, to $ 17.84, and Prudential Financial dropped $ 5.12 , or about 15 percent, to $ 28.62.

2009 The Associated Press. All rights reserved. This material May not be published, broadcast, rewritten or redistributed. BOSTON_Regulators on Thursday denied the life insurance industry calls to ease rules specifying how much money they must set aside to absorb potential losses and pay claims.