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At The Crossroads: The Life Insurance Industry And Financial Services Reform

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  • Gary E. Hughes

Abstract

In September of 1996, The Board of Directors of the American Council of Life Insurance (“ACLI”)reversed decades of policy and embraced for the first time the concept of reciprocal ownership or “affiliations” between life insurance companies and commercial banks. Under this new policy mandate, the ACLI is advocating federal legislation that would permit banks to sell all types of insurance and control insurance underwriters through separate affiliates or subsidiaries. In return, 1) insurers would have the authority to acquire banks; 2) the insurance activities of banks would be fully subject to state insurance regulation; and 3) federal bank regulators would be precluded from preempting state regulatory authority. This article reviews the various factors that precipitated this watershed policy decision, discusses the structural and regulatory issues that are important to life insurers, and speculates briefly on the prospects for financial services legislation.

Suggested Citation

  • Gary E. Hughes, 1997. "At The Crossroads: The Life Insurance Industry And Financial Services Reform," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 1(1), pages 85-97, July.
    • Handle: RePEc:bla:rmgtin:v:1:y:1997:i:1:p:85-97
    DOI: j.1540-6296.1997.tb00065.x
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    Cited by:

    1. Cowan, Arnold R. & Howell, Jann C. & Power, Mark L., 2002. "Wealth effects of banks' rights to market and originate annuities," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(3), pages 487-503.

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