The Treasury Department's Federal Insurance Office last week said that it is looking for public comments focusing specifically on systemic risk as part of a report on modernizing insurance regulations.
The request for comment ran in the Federal Register. Interest groups and others have until Dec. 16 to submit their input.
The report was mandated by the Dodd-Frank Act.
Specifically, the Treasury Department and the FIO are looking for comments on systemic-risk regulation in relation to insurance, capital standards and the relationship between capital allocation and liabilities, as well as consumer protection for insurance products and practices, including addressing gaps in the state regulatory framework.
Bob Hunter, director of insurance at the Consumer Federation of America, said that his group hasn't started on its response to the request for information, but he expects that systemic risk figures will appear prominently.
“The problem is that if one of these very large insurers goes under and needs hundreds of millions from the guarantee funds, then that's going to put some real pressure on other insurance companies,” Mr. Hunter said.
REGULATORY TERRITORY
Other issues that the CFA expects to address include state regulation on insurers' claims practices and policy rates.
Mr. Hunter noted that it is unrealistic to assume that either federal or state regulators would be better at overseeing both issues.
Rather, a solution could combine aspects of both state and federal insurance regulation, he said.
The National Association of Insurance and Financial Advisors said that it expects to turn in its comments to the FIO and Treasury Department prior to the deadline.
NAIFA supports state regulation and stands by state insurance regulators' creation of the Interstate Insurance Product Regulation Commission, a multistate group that has developed uniform product standards for life insurance, long-term-care coverage and annuities.
Still, while multistate efforts have worked to introduce products quickly and uniformly without lengthy individual state approval, NAIFA said that life insurance and annuities ought to remain under the oversight of state regulators. “This has gone a long way to create uniformity,” NAIFA president Robert Miller said of the joint commission.
Leadership at the National Association of Insurance Commissioners needs to convene before coming up with a set of talking points for its response to the Treasury Department and the FIO, spokeswoman Vanessa Sink said.
Email Darla Mercado at [email protected]
