On Tuesday, September 16, 2014, the U.S. House of Representatives passed H.R. 5461
by a vote of 327-97 (the “Bill”). Most significant to the insurance industry is Title I of the Bill, which clarifies the application of certain leverage and risk-based requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Under Title I, federal regulators would not be required to include insurance companies when establishing the minimum leverage capital requirements and minimum risk-based capital requirements on a consolidated basis for a depository institution holding company or a nonbank financial company. As a result, federal regulators would be able to use their discretion to exclude insurance companies from such calculations. Title I also bars federal regulators from requesting that insurance companies prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP), and instead requires that they accept financial statements prepared using Statutory Accounting Principles (SAP).
The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) issued a press release
praising the passage of the Bill and stating that “The Big “I” supports Title I of this legislation which recognizes the unique nature of insurers as financial services providers and the inherit distinction between the banking and insurance markets. It clarifies that insurance companies subject to Federal Reserve oversight are not forced to comply with bank-centric capital standards.”
The U.S. Senate previously approved stand-alone legislation regarding Title I. Some have voiced concerns that the other Dodd-Frank Act revisions included in the Bill may be viewed as controversial by members of the U.S. Senate and could prevent or delay the Bill’s approval. Alternatively, if unanimous U.S. Senate consent is obtained, then the Bill will be passed into law this week and sent to President Obama for enactment.