Treasury Deputy: Dodd-Frank Makes US a Player in International Regulation

The now-forming U.S. Federal Insurance Office is a “tremendous step forward” toward modernizing insurance regulation in the United States and allowing the nation to better forge international agreements, said Deputy Treasury Secretary Neal Wolin in a speech at the London Stock Exchange.

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The Dodd-Frank financial reform act keeps regulatory authority at the state level. But in forming the FIO, the act equips the federal government to “increase international cooperation on insurance regulation, enhancing our collective efforts in addressing risks posed to the financial system,” Wolin said in prepared remarks.

The FIO is in the process of becoming a member of the International Association of Insurance Supervisors. The Treasury Secretary is now authorized to negotiate international agreements on prudential insurance measures, he said.

“We anticipate that the Federal Insurance Office will be actively involved, for example, in working with the representatives of other countries on reinsurance collateral and U.S. equivalence under Solvency II,” said Wolin, who was president and chief operating officer for the property/casualty office of Hartford Financial Services Group Inc. before joining the Obama administration in 2009.

Europe’s insurers are facing two big changes in the way their businesses are measured in 2013, as the European Union’s Solvency II directive goes into effect and the International Financial Reporting Standard is adopted by more countries (BestWire, Nov. 1, 2010).

An array of insurance trade associations from around the globe sent a joint letter to G20 leaders ahead of their summit earlier this month asking for consideration of “the differentiated nature of insurance when deciding upon any measures to address systemic risks.” The call to treat insurance oversight separately from banking regulation was signed by the American Insurance Association, the American Council of Life Insurers, the Canadian Life and Health Insurance Association, the European Insurance and Reinsurance Federation and the General Insurance Association of Japan, among others (BestWire, Oct. 29, 2010).

(By Sean P. Carr, Washington Bureau Manager: sean.carr@ambest.com)