In response to President Donald Trump’s executive order issued earlier this year, the U.S. Department of the Treasury (Treasury) released its report on the regulatory environment for the asset management and insurance industries on October 26. In the report, Treasury endorsed the current state-based system of insurance regulation in the United States. The report’s key highlights include the following:
- Refocused Federal Insurance Office (FIO) – Treasury outlined five “pillars” that will guide the FIO’s mission. In general, the administration makes clear Treasury is committed to the FIO’s increased transparency and stakeholder engagement by being more accessible to various stakeholders through public and private forums and commits the FIO to more regular and consistent engagement with state insurance regulators.
- International Standard-Setting Processes – In general, the report calls for a coordinated, stakeholder-informed, unified position for the U.S. when it comes to international regulatory discussions.
- Covered Agreement – The report makes clear Treasury believes appropriate transparency and regular, substantive engagement with stakeholders is necessary for the proper implementation of the U.S.-European Union Covered Agreement.
- U.S. Department of Housing and Urban Development’s (HUD) Disparate Impact Rule – The report addresses HUD’s intention to apply this standard to insurance.
- Terrorism Risk Insurance Program – Treasury is directing the FIO to coordinate with state insurance regulators and the National Association of Insurance Commissioners (NAIC) to attempt to eliminate or reduce inconsistencies between the existing data calls and attempt a single data call going forward.
- Keeping the Consumer Financial Protection Bureau (CFPB) Out of Insurance – The Treasury report recommends that Congress clarify the “business of insurance” exception to prevent the CFPB from engaging in the oversight of activities already monitored by state insurance regulators.
- The Federal Reserve & Insurance – Since the Dodd-Frank Wall Street Reform and Consumer Protection Actwas passed, insurance companies that also owned thrift institutions have been subject to oversight at the holding company level by the Federal Reserve. The report calls on the Federal Reserve to reduce duplicative and inefficient oversight, leverage information from state regulators and the NAIC, harmonize its financial reporting and record-keeping requirements with corresponding state regulatory requirements and tailor examinations based on each institution’s unique features.
- Systemic Risk & Insurance – This section of the report noted the Financial Stability Oversight Council maintains primary responsibility for identifying, evaluating and addressing systemic risks in the U.S. financial system. However, it also reaffirmed the states are the insurance industry’s primary regulators and any type of insurance regulation at the federal level should be conducted in coordination with the states.
- National Association of Registered Agents and Brokers Board – Treasury committed to expeditiously recommending nominees to the president and to soliciting nominee recommendations from stakeholders.
A copy of Treasury’s full report can be found here. For more information, contact Meagan or your local BKD advisor.