The U.S. government is being asked to support a new measure before the U.N. that would separate banks and insurance companies from the Financial Stability Board’s efforts to overhaul the international banking system. Several insurance company trade groups have been partitioning President Obama to join other G20 leaders in these efforts, hoping that the added support will affect the measure toward their goals.
Insurers are concerned with this issue because one set of regulations is being used to govern both banking institutions and insurance companies. Given the recent failings of several of the world’s banks, insurers are eager ensure new regulations do not have a negative impact upon their industry.
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David Snyder, vice president and associate general counsel of the American Insurance Association, says that the insurance industry is not liable for the financial crisis most banks in other countries find themselves in today. The industry should not be held responsible for faulty banking practices, he says. “There are distinct differences between banking and insurance models. More layers of regulation are not justified because the existing insurance system works well.”
Insurance advocacy groups want the insurance industry to be held accountable to completely separate regulations. Currently, governments are trying to overhaul the banking industry, which means making sweepings changes to regulations. These are the same regulations that govern insurance companies, meaning that any changes to banks will have implications to the insurance industry. Insurers are pushing for segregation because they are concerned that the radical changes coming to the banking system could severely affect their ability to do business.