Washington
The new Financial Stability Oversight Council is seeking input about what criteria should be used in placing non-bank financial companies, such as insurers, under its federal scrutiny.
The request was prompted by Section 113 of the new Dodd-Frank financial services reform law, which gives the FSOC authority to subject non-bank financial companies, including insurers, to oversight if they pose a potential threat to the country's financial stability.
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 urged all insurers to take heed of the request for comments and respond. Indeed, the 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, noted AIA's senior vice president and general counsel, Stef Zielezienski.
In particular, he said, "this will allow us to reinforce with the [FSOC] the unique nature of our industry, the financial strength that underlies our business model, and the current financial regulatory standards that support that model."
The call for comments by the FSOC–which includes Missouri Insurance Commissioner John Huff as a non-voting member–was published in the Oct. 6 Federal Register.
Meanwhile, the Treasury Department is moving quickly to create a Federal Insurance Office, as called for under the Dodd-Frank law, with existing staff laying the groundwork while the department conducts a public search for a director, Deputy Treasury Secretary Neal Wolin told Congress.
Mr. Wolin–who was president and chief operating officer of the property and casualty insurance subsidiaries at the Hartford Financial Services Group a few years ago–also said Treasury "will make every effort to ensure a cooperative and collaborative relationship with the National Association of Insurance Commissioners."
Mr. Wolin said senior Treasury officials and staff "are engaging frequently with the NAIC as well as other interested parties."
He added that Treasury is establishing with NAIC a framework within which the FIO and the states, as the functional regulators, "can work hand-in-hand."
He said Treasury is also working to engage effectively with representatives of other countries on insurance regulatory issues and will also be working closely with the U.S. Trade Representative, as required by the new law.
In addition, he noted that Treasury is making plans for a system that will provide FIO with industry and insurer data and information, including data to monitor access to affordable insurance products by traditionally underserved communities and consumers, minorities, and low- and moderate-income people.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.