At the end of last week, Florida Republican U.S. Rep. Bill Posey signed on to a bipartisan effort to ensure insurance policies wont be used to bail out financial institutions.
Posey announced on Friday that he was sponsoring the Policyholder Protection Act. The proposal would make state insurance regulators part of the process when the Federal Deposit Insurance Corp. (FDIC) is part of the process when banks are liquidated. The bill would ensure that all the tools are available to state insurance regulators to protect policyholders from undue harm and continue to pay claims regardless of the financial condition of an affiliated institution when banks go under.
Sitting on the House Financial Services Committee, Posey brought out the bill with a Democrat who also serves on it -- U.S. Rep. Brad Sherman of California. The bill was sent to the House Financial Services Committee last week.
Its simply wrong to force average middle-class families to put their homeowners or life insurance policies at risk because some Wall Street firm made a bad bet, Posey said on Friday.
I strongly support this bipartisan, common-sense fix that needs to be made, Sherman said. It will ensure that those with insurance policies will not have the security of those policies undermined by a contingency they could not foresee.
The Senate version is being backed by two senators who sit on the U.S. Senate Banking, Housing and Urban Affairs Committee: U.S. Sen. David Vitter, R-La., and U.S. Sen. Jon Tester, D-Mont. The Senate bill was sent to the Banking, Housing, and Urban Affairs Committee last week.
Returning discretion to insurance state regulators, rather than the federal government, will better protect consumers and taxpayers, said Vitter.
Insurance is designed to protect customers against risk, and policyholders shouldnt be on the hook for a failing bank thats tied to their insurer, said Tester. This bill empowers state insurance regulators to protect policyholders, regardless of their organizational structure.
Reach Kevin Derby at kderby@sunshinestatenews.com or follow him on Twitter: @KevinDerbySSN
