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Insurers In Talks Seeking Exemption From Pre-Funding Systemic Risk Fund

Insurers with assets of more than $50 billion would not be subject to the pre-funding provisions of the resolution authority that would be created in Senate financial services reform legislation to deal with firms posing a systemic risk to the economy.

By Arthur D. Postal | Updated on March 21, 2010

Insurers with assets of more than $50 billion would not be subject to the pre-funding provisions of the resolution authority that would be created in Senate financial services reform legislation to deal with firms posing a systemic risk to the economy, under changes to the bill being negotiated by the insurance industry, the National Underwriter has learned. Moreover, the industry also hopes to win clarifying language in the bill ensuring that large insurers would be subject to federal oversight only under extremely limited conditions.

The changes being sought by the industry would be included in legislation being marked up this week by the Senate Banking Committee. The changes are being negotiated with Sen. Chris Dodd, D-Conn., chair of the committee, and Sen. Mark Warner, D-Va.

“While the language will still need some additional clarification, it appears the intent of Chairman Dodd was not to have insurers assessed to capitalize the initial $50 billion fund,” according to an industry lobbyist who spoke on condition of anonymity during the sensitive negotiations. Indeed, the lobbyist cautioned that the compromise is tentative “and nothing has been secured.”

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