Insurers Fret Over Bank Tax

The ambiguity surrounding the Obama Administration's proposed Financial Crisis Responsibility Fee is causing insurers consternation.

The fee, intended to help recover the assistance afforded financial institutions during the economic crisis, is aimed at business with more than $50 billion in assets. While the administration says banks are the primary target of the task, roughly a dozen property/casualty insurers meet the $50 billion threshold.

"Until we see the final details, it’s unclear how this tax will impact the property/casualty industry,” says Blain Rethmeier, a spokesman for the American Insurance Association. “As is the case with the regulatory reforms being considered, the industry should be recognized and not penalized for the low risk it poses to the broader financial system, the nature of our business and regulatory standards, and our existing resolution and guaranty processes. Imposing a tax like this sets a bad precedent and once you go down this road, you don’t know where it will stop."