|Copyright:||(c) 2011 Summit Business Media|
SIGNS ARE EMERGING that the sigh of relief by large insurance companies that they escaped federal oversight in the post-AIG bailout world may have been premature.
He said the Dodd-Frank law gives “the federal government unprecedented power over the insurance industry.”
He said that how Dodd-Frank gets implemented in the regulations that are being promulgated right now “will ultimately determine the amount of power that the federal power can exercise over the regulation of insurance.”
As a result, Caligiuri said, “this rulemaking has the potential to fundamentally alter what has been the state’s historic role as the primary regulator of the insurance industry.”
For example, the
In the comment letter, the ACLI, representing the entire life industry, voiced alarm about the FSOC’s desire to determine if insurers are systemically risky and therefore subject to federal oversight based on subjective scrutiny of their books by federal examiners–not on hard and fast rules that insurers will be able to challenge in court.
The ACLI asked the FSOC to clarify the “actual measures and other criteria” that regulators will use in classifying an insurer as subject to federal oversight.
The letter says the ACLI wishes “to state in the strongest possible terms our concerns with lack of substance of this proposed rule.”
The letter said that the proposed regulation “does little more than restate provisions already contained” within the law itself.
Seven property and casualty insurers with federally regulated thrift operations are so concerned about the emerging trend that they have formed a separate coalition focused on challenging the FSOC’s proposed subjective approach.
The letter written by the coalition of seven insurers contended that the “proposed regulation must provide clearer guidance to non-bank financial companies regarding the standards or methodology that the FSOC intends to use to make determinations under the proposed regulation.
The letter insists that the FSOC “must articulate the objective criteria it intends to use as a matter of public policy.”
Moreover, in testimony before the
Bair also said that the FSOC gives regulators the authority to ask the
“By collecting more information in advance of designation, the FSOC can be much more judicious in determining which firms it designates as systemically important financial institutions, or SIFIs,” Bair said.
All of this points toward the increasingly rocky relationship between the
In comments at a private conference in
Ms. Voss voiced concern at the conference, in a memo to the National Underwriter and in a letter on
Voss also voiced concern that the Obama administration has not as yet seen fit to nominate the independent insurance representative to the FSOC required by the Dodd-Frank law, as well as the fact that the
That post, mandated by statute, was created to insure liaison with state regulators and to provide information to the Treasury secretary on domestic and international insurance issues.
Specifically, Huff is being barred by the FSOC staff, as stated in by Voss at the
The same confidentiality is being enforced regarding the three NAIC staffers who are assisting Huff in his work with the FSOC.
The NAIC is getting in its licks, too, however. According to several sources, the NAIC has declined an FSOC request to allow staffers the same access to insurance data maintained by the NAIC as provided to state insurance commissioners.
According to these sources, this is partially in response to the decision of
The comments were sent to the FSOC in regards to the agency’s request for establishing what objective criteria it will use in determining whether to designate nonbank financial companies (“NBFCs”) for prudential supervision by the
He said “it will be very interesting” how this plays out.
He sees congressional pressure on the FSOC not to promulgate the rule establishing a framework within the framework itself for determining if an insurer is systemically risky until the FIO post is filled and the independent insurance member of the FSOC is nominated by the administration and confirmed by the
Arnold cites letters from members of both the