Industry contests AIG’s views that P&C market needs bailout
Property-and-casualty insurers have told the US Senate Banking Committee and House Financial Services Committee that they don't pose a risk to the financial system and do not need special regulation, Dow Jones reports.
In a letter Thursday the two major organisations that represent the property-and casualty insurance industry contended that the industry is competitive and well capitalised and relies on minimal leverage.
They specifically refute AIG’s claim that, as the largest US P&C insurer, its collapse would cause a major disruption in that marketplace.
"The document's suggestion that customers would pay more for their insurance if AIG's P&C companies failed ignores the effects of supply and demand, competition and regulatory oversight," American Insurance Association president and chief executive Leigh Ann Pusey and Property Casualty Insurers Association of America president and CEO David Sampson argued.
U.S. insurance companies are regulated by the states, not at the federal level. But lawmakers may seek to establish an optional federal charter for the industry, a change that is heavily backed by life insurers. The proposal, which is gaining momentum in Congress, could be folded into the effort to revamp the financial system.
