FSOC Seeks Insurer Input On Extent Of Oversight Authority

NU Online News Service, Oct. 6, 3:16 p.m. EDT

WASHINGTON–Insurers and other non-bank financial companies are being asked for feedback regarding the extent of oversight authority the new Financial Stability Oversight Council (FSOC) should have.

The request was prompted by Sec. 113 of the new Dodd-Frank financial services law, which gives the FSOC the authority to subject non-bank financial companies like insurers to oversight if they pose a potential threat to the financial stability of the U.S.

Insurers, for example, could be subject to FSOC oversight if the new group determines that "material financial distress at such a firm, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the firm, could pose a threat to the financial stability of the United States."

The American Insurance Association (AIA) called on all insurers to take heed of the request and offer comments.

Stef Zielezienski, AIA senior vice president and general counsel, said this public comment phase is extremely important because it provides industries like insurance the opportunity to express specific views on the process and rulemaking going forward.

In particular, he said, "this will allow us to reinforce with the Financial Stability Oversight Council the unique nature of our industry, the financial strength that underlies our business model, and the current financial regulatory standards that support that model."

Mr. Zielezienski added, "The supervision and regulation of certain non-bank financial companies are of considerable interest to AIA and its members, and we look forward to sharing our views with the Council."

The FSOC is an entity created by the Dodd-Frank Wall Street Reform and Consumer Protection Act that is supposed to keep tabs on systemic risk at insurers as well as other financial services companies.

The statutory chairman of the council is the Treasury secretary, and the council held its first meeting Friday.

The call for comments was published today in the Federal Register.