Friday, February 13, 2009
Are Insurers Next?-6
"State insurance regulators voted down a package of proposals to ease reserve and capital requirements for life-insurance products, after the move came into a firestorm of criticism from consumer advocates. ... In recent weeks, the NAIC encountered criticism from consumer-advocacy groups charging it was unnnecessarily rushing to ease rules that would hurt owners of life-insurance policies and auuniities. The groups, which included the Consumer Federation of America and the Center for Economic Justice, maintained the changes would reduce the financial cushion that life isurers had to keep on hand to pay claims. A trade group of life insurers, an actuarial firm and at least two credit-ratings firms have maintained that many of the changes make economic sense. They said that some of the rules in question are overly conservative and, in some cases, redundant. ... 'So far, the insurance industry is in much better shape than most of the rest of the financial-services sector because of strong state solvency regulations', said Roger Sevigny, NAIC president and New Hampshire insurance commissioner", my emphasis, Leslie Schism at the WSJ, 30 January 2009.
That seals it. Two of the ratings agencies said the proposed changes are OK, therefore, they must be fine. What idiots run the insurers! They actually hired ratings agencies to lobby for the rules changes. Who at the agencies said the proposed changes are OK? Yuri Yoshizawa, my 17 June 2008 post, link: http://skepticaltexascpa.blogspot.com/2008/06/monolines-are-dead-rating-agencies.html.