July 24, 2010
A national panel of insurance regulators yesterday voted down a plan that would have propped up life insurers by allowing them to operate with thinner financial cushions.
The life insurance industry had pleaded for the relief, saying some companies need help urgently to weather the economic crisis.
Opponents said the plan would have weakened insurers’ ability to keep promises to policyholders and would have made it harder for consumers to know how much confidence to have in any individual insurer.
“This will pull the wool over the eyes of millions of Americans,” J. Robert Hunter, a former regulator who now focuses on insurance issues for the Consumer Federation of America, said at a hearing Tuesday on the proposals that comprised the plan.
In effect, the proposals would have served as a cashless bailout. They would have changed the way companies and regulators measure life insurers’ financial strength, making them look healthier than they otherwise would appear.
Article: Washington Post
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