The National Association of Professional Insurance Agents (PIA) has praised the U.S. House of Representatives for passing the Policyholder Protection Act (H.R. 1478). The measure prohibits federal regulators from using assets designated to pay out insurance claims to “prop up” an affiliated bank. It also allows for state regulators to rehabilitate a troubled bank, rather than moving directly to liquidation. “This legislation greatly improves the ability of state insurance regulators to protect policyholders by ensuring that insurance companies structured under larger financial firms are not held financially responsible for an affiliated bank’s failure or financial crisis,” said PIA National Vice President of Government Relations Jon Gentile. “PIA urges the Senate to follow the House’s lead and pass this bill.”
The Policyholder Protection Act specifically prohibits federal banking regulators from moving the assets of insurance companies, which are regulated at the state level, to a bank if the state insurance regulator determines it would harm the status of the insurer. The bill also protects policyholders from actions taken by the Federal Deposit Insurance Corporation (FDIC) that would liquidate insurers, a function of state insurance regulators. It limits the ability of the FDIC to seize insurance company assets intended for policyholder payments when an affiliated financial entity is subject to liquidation.
“PIA thanks the House for passing this common-sense consumer protection legislation to make sure that the money set aside to pay insurance claims is not appropriated by the federal government to bail out ‘too big to fail’ financial institutions,” Gentile said.
Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street AmericaSM. PIA’s web address is www.pianet.com.