Designating AIG, Prudential and MetLife as “globally significant insurers” puts them at a commercial disadvantage, the American Council of Life Insurers (ACLI) says.

ACLI CEO Dirk Kempthorne told a US Senate Banking Committee hearing the “immediate and potential negative consequences of designation are significant”.

“The insurance industry is highly competitive,” he said. “The additional regulation imposed upon a designated company can place that company at a significant competitive disadvantage relative to its competitors.”

Mr Kempthorne says capital standards are the most obvious example.

“If capital requirements on designated insurers are materially different from those imposed by the states, designated insurers may find it difficult to compete against non-designated competitors, resulting in a loss of business or an altered product mix.

“Less competition or less product availability is not in keeping with a healthy market that best serves insurance consumers.”

The ACLI wants the designation applied on the three insurers’ activities, rather than their global size.

Mr Kempthorne says the Financial Stability Board and the Financial Stability Oversight Council (FSOC) have designated asset managers on activities.

“The difference in treatment is evident in the manner in which the FSOC has approached the evaluation of insurers and asset managers,” he said.

“Instead of designating asset managers, the FSOC has directed its staff to ‘undertake a more focused analysis of industry-wide products and activities to assess potential risks associated with the asset management industry’.”

He says the FSOC held a conference with asset managers and interested parties to examine the industry.

“No such public hearing was conducted to engage insurers and other stakeholders about the insurance industry. the FSOC’s actions with regard to the asset management industry stand in sharp contrast to [its] treatment of the insurers.”