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FEATURE: The future of US insurance regulation
19 November 2009
Insurers are facing the threat of stricter regulation, while the debate continues over whether they should be regulated at the federal or the state level.
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[regulation]
[naic]
[Insurance Information Institute]
[Consumer Financial Protection Agency]
[Federal Office of Insurance]
The next few weeks of regulatory debate are critical for the insurance industry. According to Bob Hartwig, president of the Insurance Information Institute (III), the final decisions in Congress regarding systemic risk regulators and the Federal Office of Insurance “seem to be coming closer to reality”.
As part of the Financial Stability Improvement Act of 2009, an initial draft of which was released on October 27, a new Federal Services Oversight Council will promote the supervision and regulation of large, risky financial firms. The council, which will include the heads of the principal federal financial regulators, will have the ability to identify emerging risks in the largest, most interconnected and highly leveraged institutions.
These “too big to fail” firms would face much stricter regulation than other regulated firms, including higher capital requirements and more robust consolidated supervision. The proposals would force companies to internalise the costs they could impose on...
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