USAA Insurance & Finance Reform
June 4, 2010
We’ve been a USAA customer for years and have always been happy with their service. One thing we like about the company is that at the end of most years, we get a USAA dividend check. Since they’re a privately owned company, not publicly traded, they give money back to the policy holders instead of to investors.
A while back we got an email from USAA letting us know that the financial reform bill has something known as the Volcker Rule that was going to impact the way they operated. The email said that if the legislation passed unchanged it would:
* Prevent USAA from managing the association’s portfolio as we have for the past 87 years.
* Jeopardize our ability to continue offering many of our competitive products.
* Limit our ability to return money to our members. Last year, USAA returned $1.2 billion to our members in the form of distributions, dividends, and bank rebates and rewards.*
The email asked us to contact our Senator and ask them to amend the Volcker rule to take into consideration companies like USAA. Then a week ago we got another email message from USAA indicating the customer feedback actually had an impact:
“Thanks to the more than 750,000 e-mails and phone calls generated by USAA members, employees and friends, there is now widespread and bipartisan understanding that an amendment to the Volcker Rule would be good for consumers.”
The way I understand it, USAA supported the Merkley-Levin amendment, which would have allowed insurance companies like USAA to continue its insurance business without being subject to the Volcker rule restrictions on a holding bank. From what I gather although Merkley-Levin didn’t make it in the Senate bill there is still ongoing political negotiation on the Volcker rule and Merkley-Levin amendment so it’s too early to say whether the push from USAA was ultimately effective or not.
I imagine many financial companies were lobbying for changes to the finance reform bill. With each one making a case for their specific needs I’m sure it’s difficult for legislators to discern where true needs lie and what the best actions would be to correct areas where there are potential problems.
If USAA is required to follow the restrictions they’re fighting against then their thought is they’ll see higher costs and have to raise member rates. I don’t know if these changes will end up effecting USAA or if our rates will increase or not but it will be interesting to see what impact the finance reform bill has, intended or otherwise, on consumers.


All posts by Ben Edwards
Thanks for this valuable insight on Merkley-Levin amendment. The matter of concern
is that these changes might affect the rate of premium and enhance insurance costs.