[Congressional Record Volume 161, Number 168 (Monday, November 16, 2015)]
[House]
[Pages H8217-H8219]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1930
POLICYHOLDER PROTECTION ACT OF 2015
Mr. POSEY. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1478) to provide for notice to, and input by, State insurance
commissioners when requiring an insurance company to serve as a source
of financial strength or when the Federal Deposit Insurance Corporation
places a lien against an insurance company's assets, and for other
purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1478
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Policyholder Protection Act
of 2015''.
SEC. 2. ENSURING THE PROTECTION OF INSURANCE POLICYHOLDERS.
(a) Source of Strength.--Section 38A of the Federal Deposit
Insurance Act (12 U.S.C. 1831o-1) is amended--
(1) by redesignating subsections (c), (d), and (e) as
subsections (d), (e), and (f), respectively; and
(2) by inserting after subsection (b) the following:
``(c) Authority of State Insurance Regulator.--
``(1) In general.--The provisions of section 5(g) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(g)) shall
apply to a savings and loan holding company that is an
insurance company, an affiliate of an insured depository
institution that is an insurance company, and to any other
company that is an insurance company and that directly or
indirectly controls an insured depository institution, to the
same extent as the provisions of that section apply to a bank
holding company that is an insurance company.
``(2) Rule of construction.--Requiring a bank holding
company that is an insurance company, a savings and loan
holding company that is an insurance company, an affiliate of
an insured depository institution that is an insurance
company, or any other company that is an insurance company
and that directly or indirectly controls an insured
depository institution to serve as a source of financial
strength under this section shall be deemed an action of the
Board that requires a bank holding company to provide funds
or other assets to a subsidiary depository institution for
purposes of section 5(g) of the Bank Holding Company Act of
1956 (12 U.S.C. 1844(g)).''.
(b) Liquidation Authority.--The Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5301 et seq.)
is amended--
(1) in section 203(e)(3) (12 U.S.C. 5383(e)(3)), by
inserting ``or rehabilitation'' after ``orderly liquidation''
each place that term appears; and
(2) in section 204(d)(4) (12 U.S.C. 5384(d)(4)), by
inserting before the semicolon at the end the following: ``,
except that, if the covered financial company or covered
subsidiary is an insurance company or a subsidiary of an
insurance company, the Corporation--
``(A) shall promptly notify the State insurance authority
for the insurance company of the intention to take such lien;
and
``(B) may only take such lien--
``(i) to secure repayment of funds made available to such
covered financial company or covered subsidiary; and
``(ii) if the Corporation determines, after consultation
with the State insurance authority, that such lien will not
unduly impede or delay the liquidation or rehabilitation of
the insurance company, or the recovery by its
policyholders''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Florida (Mr. Posey) and the gentlewoman from Wisconsin (Ms. Moore) each
will control 20 minutes.
The Chair recognizes the gentleman from Florida.
General Leave
Mr. POSEY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
include extraneous material on the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. POSEY. Mr. Speaker, I yield myself 5 minutes.
Mr. Speaker, I want to thank my colleague on the Financial Services
Committee, Mr. Sherman, for all of his help and support on the
Policyholder Protection Act as well as the chairman and ranking member
of the committee for their support.
I have devoted a great deal of time to insurance issues both as a
State legislator in Florida and as a Member of Congress. For over 3
years, I have been pushing legislation to address problems that Dodd-
Frank created for insurance companies and, more importantly, their
policyholders.
I credit former Congresswoman Judy Biggert for bringing these issues
to light and for offering a positive solution focused on protecting
consumers.
After a lot of hard work, multiple hearings, drafts, redrafts, and so
forth, we now have before us this bipartisan, commonsense legislation
that will ensure that State regulators continue to have the tools they
need to protect policyholders back home.
Mr. Speaker, insurance policyholders shouldn't be on the hook for an
affiliated company's failure or financial distress. But, unfortunately,
that is an all-too-real scenario under the current law.
[[Page H8218]]
Today, in certain circumstances, insurance assets--those set aside to
pay out policyholders' claims--could be used as a source of strength to
offset risky bets of an organization affiliated with the insurance
company.
This practice could threaten the solvency of an insurer and undermine
its ability to keep promises it makes to its customers, customers who
rely on their policies to protect their families' homes, their
livelihoods, and their retirement.
It is simply wrong to force middle class families to put their
homeowner's or life insurance policies at risk because of bad bets that
someone might have made on Wall Street. Therefore, our bill clarifies
that State regulators can wall off these assets from contagion,
regardless of how an insurance company is structured.
The bottom line here is that insurance policies shouldn't be raided,
period, and certainly not to bail out a financial institution that made
poor decisions. Consumers deserve certainty that they will be
protected, which is why our bill will also require the FDIC to notify
State regulators and consult with them before taking a lien on
insurance company assets. In the rare event that this action is being
considered, this legislation requires that the FDIC first consider the
impact that taking such a lien could have on policyholders.
Taken together, these measures safeguard insurance assets and make
certain that they continue to be used for their primary purpose, which
is to pay out the claims of policyholders.
The Policyholder Protection Act enjoys broad support from insurance
regulators, State regulators, guaranty funds, consumers
representatives, and the industry.
Mr. Speaker, I am proud of our work on this commonsense consumer
protection bill. I urge all of my colleagues to support it.
Mr. Speaker, I reserve the balance of my time.
Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 1478, the Policy
Protection Act. I applaud my colleagues, Mr. Posey of Florida and Mr.
Sherman of California, on their diligent work that they have put into
crafting this legislation in the Financial Services Committee. I
supported this legislation in committee.
The bill, in a nutshell, ensures that insurance company assets are,
first and foremost, used to protect and pay policyholders' claims.
Mr. Speaker, I yield such time as he may consume to the gentleman
from California (Mr. Sherman) to further discuss this bill.
Mr. SHERMAN. I thank the gentlewoman for yielding.
Mr. Speaker, it has been a pleasure to work with the gentleman from
Florida on this bill. I was pleased to join him in introducing this
legislation.
This is a commonsense bill. It has, I believe, total support. We
voted on it in committee. It was supported unanimously. It has no
objection from any of the regulators, such as the FDIC, or others.
It is supported by most insurance commissioners all over the country,
including Dave Jones, Insurance Commissioner in California. It is
supported by the American Council of Life Insurers, Property Casualty
Insurers, and the Big I. So this bill has industry and the regulators
behind it, Democrats and Republicans. It is unanimous.
What does the bill do? It deals with the circumstance where you have
an insurance company that is a subsidiary of a financial services
holding company, and it basically lays out the principle that the
assets of the insurance company are there to pay insurance claims.
The State regulator of the insurance company regulates that insurance
subsidiary and makes sure that the assets are there to provide
insurance reserves and to pay insurance claims. Those assets cannot be
invaded to pay for bad bets made by affiliated companies.
So, first, the bill says that State-regulated insurance company
resources cannot be used as a source of strength for an affiliated
financial firm that is being liquidated under title II of Dodd-Frank.
Second, the financial regulator may not place a lien on the assets of
the State-regulated insurance company under title II unless the State
insurance commissioner consents. It is the State insurance
commissioner's fundamental duty to protect the policyholders.
Finally, the State insurance commissioner has the primary authority
to determine whether to liquidate or rehabilitate insurance companies.
The insurance commissioners did an excellent job during the meltdown
of 2008 to make sure that policyholders were paid. This bill reaffirms
that the State regulators have the ability to wall off insurance
company assets to protect policyholders. The bill will make sure that
those assets are not jeopardized by complex bets, risk-taking, or poor
management of affiliated companies.
In a nutshell, we want to make sure that those who have insurance
feel secure. This bill will do that.
Mr. POSEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Missouri (Mr. Luetkemeyer), the chairman of the Housing and Insurance
Subcommittee.
Mr. LUETKEMEYER. Mr. Speaker, I thank the gentleman from Florida for
yielding.
A majority of the Financial Services Committee and, in fact, the
majority of Congress recognizes the need to preserve the current State-
based model of insurance regulation. It is an important conversation
because our model, different from others around the world, centers on
the protection of policyholders before anything else.
H.R. 1478, the Policyholder Protection Act, introduced by the
gentleman from Florida (Mr. Posey) and the gentleman from California
(Mr. Sherman) works to guarantee the policyholder protections that have
served the U.S. insurance system and consumers so well.
The bill guarantees the authorities of State regulators to protect an
insurance company from contagion, ensuring that policyholders can be
paid for claims regardless of how that insurer is organized.
It also codifies the existing role of the FDIC to consult with State
regulators and requires full consideration of all implications a
resolution could have on policyholders. The legislation also ensures
that the States maintain authority over an insurer's resolution
process.
Insurers typically hold large amounts of capital. They do so because
the primary function of an insurer is to pay claims. Mr. Posey's bill
makes sure those assets which go towards payment of claims aren't used
to offset other activities of affiliated businesses.
There is a genuine concern that other affiliates could raid an
insurance affiliate's assets to prop up another entity within its
company's holdings. This should never be allowed. This bill prevents
that from happening. In other words, it says ``hands off'' to other
assets of the insurance company.
The Policyholder Protection Act enjoys broad bipartisan support. It
was passed unanimously by the Financial Services Committee because it
codifies protections for insurance policyholders.
I congratulate the gentleman from Florida and the gentleman from
California on their bill and thank them for their work on behalf of the
consumers. I urge all my colleagues to join me in supporting this
legislation.
Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
This bill, which Mr. Sherman and Mr. Posey have worked so diligently
on, brings parity among State law, Federal bank holding company laws,
and now the savings and loan holding companies.
It clarifies that the FDIC's backup receivership authority is not
triggered if a State insurance regulator decides to rehabilitate rather
than to liquidate a troubled insurance company.
I certainly commend this bill to my colleagues. The Financial
Services Committee has looked it over carefully. I urge support of this
balanced proposal.
Mr. Speaker, I yield back the balance of my time.
Mr. POSEY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Florida (Mr. Posey) that the House suspend the rules and
pass the bill, H.R. 1478, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
[[Page H8219]]
A motion to reconsider was laid on the table.
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