Understanding the Decision Makers and Dynamics of an Expanding Federal Role
There was a time when the insurance industry was regulated at the state level and there was no federal regulator of insurance. Over the last two decades, actions of the federal government influenced the regulation of insurance and now, even international regulators are affecting the business of domestic insurers.
The Dodd-Frank Act expanded the Federal Reserve’s responsibility as the consolidated supervisor of insurance holding companies. At the end of 2015, the Federal Reserve served as the consolidated supervisor for one-third of U.S insurance industry assets. Such regulation required the Federal Reserve to enact capital standards for insurance companies that control an insured depository institution, or one’s designated by the Financial Stability Oversight Council (FSOC).
The increased oversight and regulation requires insurance companies to have an active, consistent voice in Washington to educate policymakers as to the key differences of banking and insurance, from activities to balance sheets. With other agencies also influencing policy, directly and indirectly—Federal Insurance Office, FSOC, International Association of Insurance Supervisors, and even the Basel Committee—the insurance industry and its customers have much to lose if the federal venture into regulation is not done appropriately and with due care.