Sweeping financial services reforms include new insurance regulations

Insurance Update

Among the legislative changes in the Dodd-Frank Wall Street Reform and Consumer Protection Act are provisions that affect the insurance industry.

 

Now that President Barack Obama has signed the Dodd-Frank Act into law, regulators are stepping in to define details critical to implementing the legislation. The rules and definitions they ultimately promulgate, including an entirely new Federal Insurance Office, will have a significant impact on the operations – and profitability – of numerous businesses, including many well outside the financial services community.

 

The law provides for a new Financial Stability Oversight Council, governmental “resolution authority” for failing institutions, agency reorganization, a new Consumer Financial Protection Bureau and a Federal Insurance Office, as well as imposing tougher capital, leverage and liquidity requirements. 

 

Title V of the Dodd-Frank Act focuses on the insurance industry and includes the following notable provisions:

 

  • Establishes a new Federal Insurance Office in the Department of Treasury, which will monitor the insurance industry for systemic risk purposes, consult with the States, coordinate federal policy on international insurance issues (including assisting the Secretary of the Treasury in negotiating relevant international agreements) and advise the Secretary of the Treasury on major insurance policy issues
  • Requires the Director of the Federal Insurance Office to submit a report to Congress on the global reinsurance market
  • Requires the Director of the Federal Insurance Office to conduct a study and submit a report to Congress on how to modernize and improve the system of insurance regulation in the US, and
  • Seeks to streamline and improve the regulation of the nonadmitted insurance and reinsurance markets
  • §502 – Secretary of the Treasury “may” issue “orders, regulations, policies and procedures” to implement duties of new Federal Insurance Office

To learn more about the rulemaking process and its effect on insurance companies, please contact:

Aidan McCormack

To read our library of writings on the Dodd-Frank Act, please click here.