BERNANKE GETS A GRIP
Federal Reserve Board Chairman Ben Bernanke told Congress in October that the financial crisis has demonstrated the need for "systemically important" insurance companies to be subjected to federal controls.
In testimony before the House Financial Services Committee Oct. 1, he said such large insurers should be under the same consolidated supervision that currently applies only to bank holding companies.
While he did not mention the company by name, his comments about insurance companies pointed to American International Group, which was rescued with a government bailout last September.
While the Federal Reserve Board is "well suited" to the task of being the consolidated supervisor for systemically important nonbanks, a system for resolving large, troubled nonbanks such as insurers "analogous to the regime currently used by the Federal Deposit Insurance Corporation" is also needed, he said.
The chairman of a key House subcommittee in October released draft legislation that would establish a new Federal Insurance Office within the Treasury Department.
According to the draft language, the Federal Insurance Office would have the authority to monitor all aspects of the insurance industry and assist the Treasury secretary in administering the federal terrorism insurance program.
In addition, the new office would coordinate federal efforts and establish federal policy "on prudential aspects of international insurance matters" and determine whether the International Insurance Agreements on Prudential Matters pre-empt some state insurance measures.
MINN. AG SUES INSURERS
Minnesota Attorney General Lori Swanson has sued two out-of-state companies for selling allegedly fraudulent health insurance coverage to the uninsured. Swanson said the two companies are "scamming Minnesota citizens struggling with the high cost of health care into believing they were purchasing health coverage at an affordable price when they were really purchasing non-insurance products that offered limited benefits."
In separate filings, Swanson sued Consumer Health Benefits Association, a non-profit based in Florida which sold the "New Choice Health Plan," a discount health plan touted as being the same as or just like health insurance. Swanson also sued Home Health America LLC of Nevada, which offered long-term and home care benefits to elderly citizens for fees of up to $4,000 without being licensed as an insurance company.
Both companies or their owners have in the past had suits brought against them by other states over similar conduct. The latest lawsuits seek injunctive relief, restitution for consumers, and civil penalties
PRICING SEEN AS STABLE
Insurance markets are in a relative state of calm and commercial insurance buyers are benefitting from generally stable pricing, according to a new report by the Kansas City-based broker Lockton Cos. LLC.
In its overview, Lockton reports that U.S. property/casualty insurers saw results rebound to show a small profit in the first half of the year, after seeing an operating loss in the first quarter. Underwriting losses have declined since last year, but shrinking written premiums continue to pressure results.
--Compiled by staff from news and wire reports.
November 1, 2009
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