The Financial Stability Oversight Council was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010 in response to the financial crisis. The body is charged with monitoring systemic risk to the U.S. economy by identifying risks and closing regulatory gaps. It is made up of ten voting members - nine representatives from federal financial regulatory agencies and an "independent member with insurance expertise" = and five nonvoting members, including the Director of the Federal Insurance Office, and a state insurance commissioner selected by the state insurance commissioners.
One of the more controversial authorities given to the FSOC was to designate non-bank financial companies - including insurers - as Significantly Important Financial Institutions. While no traditional property/casualty insurance companies have been as-yet designated as a SIFI, many life insurance companies have been given the designation. Since 2010, the FSOC has voted to designate four companies as SIFIs: American International Group, Inc., General Electric Capital Corporation, Inc., Prudential Financial, Inc., and MetLife. General Electric was the first of these entities to sell most of its lending business to de-risk and no longer be deemed a SIFI by the FSOC, which has not yet occurred.
There is widespread concern that the insurance voices on the FSOC are being ignored in the designation process. In two cases, Prudential and MetLife, the independent member with insurance expertise and the state insurance commissioner both raised objections to designation, but they were ultimately overridden by the other 9 voting members.
NAMIC remains very concerned with the potential for any property/casualty insurer to be designated by the FSOC as a SIFI. We believe that any fair analysis of our industry clearly shows that the nature of property/casualty insurance is unique and does not - indeed cannot - pose a systemic risk to the economy.
August 29, 2019 NAMIC state, federal, and policy affairs staff attended the NAIC summer meeting held Aug. 3-6 in New York City. Please view the NAMIC NAIC Review to learn about the latest developments at the NAIC. Read more
June 26, 2019 The Property and Casualty Risk-Based Capital Working Group has proposed a new framework that would modify the bond pages in the property/casualty RBC formula and expand the number... Read more
June 26, 2019 The Treasury Department and the Internal Revenue Service on June 13 unveiled the much-anticipated final regulations related to the modification of discounting rules for insurance... Read more
May 21, 2019 The NAIC held the annual International Insurance Forum in May. Keynoting the event was U.S. Secretary of Treasury Steven Mnuchin who noted ongoing concerns with the direction of the Insurance Capital Standard at the... Read more
May 21, 2019 A NAMIC-supported bill to add a state insurance commissioner as a voting member on the Financial Stability Oversight Council was introduced in both the House and... Read more