The US insurance industry has welcomed legislation stating insurance companies should not be forced to comply with bank-centric capital standards.

The Insurance Capital Standards Clarification Act aims to ensure more effective regulation for insurance companies supervised by the Federal Reserve.

American Insurance Association President and CEO Leigh Ann Pusey says the Act reflects “fundamental differences between the insurance business model and the banking business model”.

The Independent Insurance Agents & Brokers of America group has also welcomed the “commonsense solution”.

Senior VP of External and Government Affairs Charles Symington says it “has long supported the premise that banking and insurance are different and therefore should have distinct regulatory standards”.

The Act, part of a package of measures, has been passed by the House of Representatives. It must now return to the Senate for a final vote before it can become law.

The National Association of Mutual Insurance Companies has stressed the need for urgency.

“We’ve now seen both chambers of Congress approve this legislation with virtually no opposition,” Senior VP of Federal and Political Affairs Jimi Grande said.

“In what little time they have left, we hope leaders of the House and Senate can negotiate the issues unrelated to capital and accounting standards for insurers attached to this bill and resolve this issue once and for all.”