Vitter to NAIC: Beware, FIO has its Foot in the Door of Federal Insurance Regulation

Senator David Vitter and others warn that federal regulation affecting insurance is increasing, and it could adversely affect the insurance industry.
At the Spring National Meeting of the National Association of Insurance Commissioners (NAIC) in New Orleans, Sen. David Vitter (R-La.) "warned the group that the U.S. Treasury’s Federal Insurance Office, while not a regulator, already has its foot in the door of federal regulation, as was the intent of the Dodd-Frank crafters, who had wanted even more," according to
Vitter said the NAIC should “beware” of [the FIO] and the Consumer Protection Financial Bureau (CPFB), also created under Dodd-Frank. Vitter said that the CPFB has “broad powers and little to no oversight.” The CFPB doesn’t include insurance complaints but still looms large should there be any major consumer protection debacle faulting insurance regulation.[1]
Iowa Insurance Commissioner and past president of the NAIC, Susan Voss, suggested to Sen. Vitter that federal legislators should address the NAIC's concerns that federal banking regulations, such as capital requirements, could be inappropriately imposed on insurance companies by federal insurance regulators without due consideration of the myriad differences in structure and operations between the banking and insurance industries. Such action could adversely impact both the domestic and the international insurance industries, according to Voss.[2]

Current NAIC president and Florida Insurance Commissioner Kevin McCarty also raised concerns about federal insurance regulation at the NAIC Spring Meeting, proposing that the focus should not be on the "too big to fail" concept of systematically important financial institutions (SIFIs), but rather a "too big to bail" model.[3]

Rather than designating a company as too big to fail and perhaps thereby actually encouraging risky behavior, McCarthy suggested that insurance regulators could downsize companies that become so large as to pose a systematic risk.[4]

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