WASHINGTON—The Policyholder Protection Act, introduced by Congressman Bill Posey (R-FL) and Congressman Brad Sherman (D-CA), passed the House Monday.
The Policyholder Protection Act affirms that resources from an insurance company may not be used to bail out an affiliated financial institution from liquidation under Title II of Dodd-Frank – unless the state insurance commissioner consents. This bill clarifies Dodd-Frank to ensure that resources set aside to satisfy insurance policyholder claims cannot be used to satisfy non-insurance liabilities within a holding company system.
“The bipartisan passage of this legislation proves that there is still room for common sense legislation that protects consumers,” said Congressman Sherman in a release. “It is my hope that the Senate will take up this legislation with similar success. It is unfair to policyholders at risk, because of the actions of some Wall Street firm. That is why the assets of an insurance company should be walled off from the risky practices of their affiliated financial institutions. The assets of an insurance company are needed to pay claims of their policyholders, and those dollars should not be jeopardized by complex bets, risk taking, or poor management elsewhere within a large financial firm. I want to thank Congressman Posey for his great work and leadership on this bill.”