WASHINGTON (Oct. 29, 2008) – The National Association of Mutual Insurance Companies (NAMIC) today said that policyholders should remain confident that they are protected as the property/casualty industry continues to be financially sound. The comments came as the U.S. Treasury Department considers whether to make insurance companies eligible for some of the $700 billion available through the Emergency Economic Stabilization Act approved by Congress earlier this month.
“As an industry, property/casualty insurance companies, particularly the nation's mutual insurance companies, are well capitalized and have adequate reserves to pay claims," said Charles Chamness, president and CEO of NAMIC. “NAMIC’s policy, approved by our board of directors today, is to oppose the expansion of Treasury’s Capital Purchase Program to include the property/casualty insurance industry."
According to Chamness, there is a distinction between those insurance companies that appear to be seeking federal monies and the vast majority of property/casualty insurers. “While some of the nation’s large life insurance companies are actively seeking to be included in the Treasury program, property/casualty insurers are well funded,” he said. "Our members are not interested in participating in any type of program involving direct capital infusion from the U.S. Treasury Department, and we are working with our members to promote the understanding of and commitment to mutuality."
NAMIC represents 1,400 property/casualty insurers and more than 40 percent of the marketplace. NAMIC members are mutual companies whose sole responsibility is to their policyholders rather than stockholders. A survey conducted of the NAMIC membership over the past weekend indicated that its members are confident in their ability to pay claims and overwhelmingly do not need and are not interested in receiving federal money.
“Prudent management and the state-based regulatory systems under which these companies operate include strict solvency requirements that effectively build a protective barrier around their assets and, ultimately, their customers,” Chamness said. “Even in the occurrence of a company failure, there is a state guaranty fund in place to ensure claims are paid.
“Like all Americans, insurance companies are facing challenges from their investment portfolios,” Chamness continued. “However, we fully expect that the property/casualty insurance industry, and particularly mutual insurers, will remain financially sound and resilient.”
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