Industry responds to new Dodd-Frank provisions
May 23, 2016 by Lyle Adriano
In response to the Federal Reserve’s proposal of group capital rules for insurers that it prudentially supervises, the American Insurance Association (AIA) voiced its approval Friday for the planned regulations.
Federal Reserve Board Governor Daniel Tarullo announced Friday outlines on how the Fed would regulate insurers, particularly in relation to their capital. A twin approach to regulation was proposed: there would be regulations that evaluate insurer capital in a “relatively simple” set of risk categories, and capital standards would be imposed on insurers with their own banks.
“AIA welcomed Governor Tarullo’s remarks this morning,” said AIA president and CEO Leigh Ann Pusey in a statement. “They provided needed clarity about the direction the Federal Reserve Board (Fed) intends to take with respect to its domestic group capital regulation for those insurers it prudentially supervises, and the rationale behind the twin approaches that are to be recommended.”
In particular, Pusey supported the Federal Reserve’s proposed approach for insurers with “depository institutions.”
“AIA supports this approach, which would leverage risk-based capital standards that are already employed by our state regulators,” she remarked. “For systemically important insurers, or SIFIs, the Governor proposed a consolidated approach that would be based on U.S. GAAP accounting standards. Importantly, the Governor said this GAAP-based approach would not be the same as the one employed for bank holding companies, but would be tailored to reflect the insurance business model. AIA has long asserted that any approach must reflect the insurance business model and we support using well-tested tools already in place in the U.S.”
Pusey ended her statement reiterating that the AIA is encouraged by Tarullo’s announcement. She also noted that the association looks forward to seeing more details once the ANPR is released for comment.
