H.R. 4173, The Dodd- Frank Wall Street Reform and Consumer Protection Act, is a few strokes of the pen away from being law after the Senate today passed the landmark legislation by a margin of 60-39.
While the broad restructuring of the rules under which financial services operate was aimed more at banks, there remain some large consequences for insurers. The most obvious manifestation of this is the Federal Insurance Office, which is housed in the Treasury Department, and tasked with negotiating international insurance compacts, but is superceded by state regulators in regulatory matters. Insurers also are largely exempted from new rules targeting systemically risky firms, the use of derivatives and the purview of the new Consumer Financial Protection Agency.
Nonetheless, given the scope of the legislation, insurers are evincing concern that many of the hard-won exclusions they achieved in the legislative process may be imperiled during the protracted rule-making phase after the bill becomes law.
“The impact of other major provisions in the Dodd-Frank bill—including those affecting derivatives, standard of care and systemic risk—on life insurers and consumers cannot be fully assessed until the relevant federal regulatory agencies complete the rulemaking process,” the American Council of Life Insurers said in a statement.
David Sampson, president and CEO of the Property Casualty Insurers Association of America, also struck a cautionary note. "It is important to note that this is still only the midpoint for financial services reform,” he said, “We have a long road ahead of us as we move into the rule development phase.”
Moreover, Sampson cautioned the bill may have other unforeseen implications.
"Significant improvements have been made to the final bill to minimize the potential negative consequences of adding federal oversight to the state-based insurance regulatory system,” he said. “However, deep concern remains over the long-term impact of this legislation on U.S. competitiveness for the financial services sector.”
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