For good or ill, the events of the summer of 2011 will be remembered as hugely consequential in determining the extent and manner in which insurers are regulated for decades to come. When President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) on July 21, 2010, it marked the beginning rather than the end of a process of immense import to insurers. The consensus at the time was that insurers fared well in the legislative process as the bill largely bypassed them to focus instead on reworking regulatory oversight of commercial and investment banks. "The insurance industry was the envy of all other financial services when it came to Dodd-Frank," says Jimi Grande, SVP, Federal and Political Affairs for the National Association of Mutual Insurance Companies. "The banks felt like they were hit over the head with a bar stool."
Nonetheless, as the all-important rule-making phase of the DFA now unfolds, the concern for insurers is the possibility that they may suffer collateral damage as regulators look to fix the oversights and excesses that led to the financial crisis. For example, large insurers may yet fall under the purview of new regulators, such as the Federal Reserve, or be deemed a systemic risk by the newly created Financial Stability Oversight Council (FSOC) and thus be subject to a new set of capital and reserve standards.
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