Although the insurance industry largely escaped the wrath of the Dodd-Frank Wall Street Reform and Consumer Protection Act, that doesn't mean that the insurance industry is immune from Dodd-Frank's impact. It is important to be informed about the newly created insurance watchdog agency, called the Federal Insurance Office, and the power the act gives the FIO.
The FIO's newfound authority could change the status quo in the several ways. For example, the Act allows the FIO to identify for the Federal Stability Oversight Council any insurance company whose operations pose systemic risk to either the insurance industry or the U.S. financial system as a whole – subjecting a company to oversight and regulation by the Federal Reserve Board; that marks the first time since the 1945 passage of the McCarran-Ferguson Act that insurers would be subject to federal regulation.
In addition, the FIO is tasked with issuing several reports, including an annual report on the number of times the FIO has preempted inconsistent state insurance laws. The troublesome aspect of the annual report is that Congress has given the FIO a seemingly open-ended ability to choose what information to include in its annual report. The ability to "cherry-pick" items important to the FIO's agenda is powerful, as those items will likely become the first to make it onto the congressional radar.
Gardere wants to make sure that our clients understand the full impact of Dodd-Frank on the insurance industry, are informed about all developments related to the FIO and realize the benefits of governmental relations advocacy.
For more information, read Gardere's full report in the attached document, "Insurance Regulation in the Dodd-Frank Act: Why You Should be Concerned." If you have questions related to the FIO and governmental relations advocacy, please contact Kimberly A. Yelkin ([email protected] or 512.542.7001) or Leslie Ritchie Robnett ([email protected] or 512.542.7140).