Congress and the Bush administration are thinking about having the Federal Deposit Insurance Corp. guarantee insurance products.
“That might be a direction where our abilities would be expanded,” FDIC Chairman Sheila Barr said Wednesday at an international banking conference in Arlington, Va.
Bair declined further comment, as did the Treasury Department.
Bair made her comments in response to a question. It is not clear whether Bair was talking about guaranteeing life products, property-casualty products, or both types of insurance products.
The American Council of Life Insurers, Washington, says it is studying Bair’s remarks.
Cliston Brown, an official with the Property Casualty Insurers Association of America, Des Plaines, Ill., and Nancy Grover, a representative for the National Association of Mutual Insurance Companies, Indianapolis, say their groups question the need for FDIC backing of insurance.
At the PCI, “our reaction is that the insurance industry is strong, and we support reforming the state-based insurance regulatory system based on sound principles of good regulation and preserving the prerogatives of the states,” Brown says.
“NAMIC does not think shifting the regulation of insurance from the states to the federal government is either needed or warranted,” Brown says. “The system of state based guaranty funds is strong and well placed to deal with insurer insolvency.”