On Tuesday, March 10, the Bipartisan Policy Center, which was created in 2007 by former Congressional leaders as a Washington D.C.- based think tank, announced it was launching an insurance task force. The task force would assess the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on insurance regulation. The D-F Act did not expressly challenge the system of state-based insurance regulation, but it created the Federal Insurance Office (“FIO”) within the Treasury Department to monitor all aspects of the insurance industry. While the FIO was not provided with insurance regulatory, authority or power to enforce existing insurance law, the Federal Reserve was charged with designating systemically important financial institutions (“SIFIs”) and regulating them. Three major insurance companies – AIG, Prudential and MetLife – have been named as SIFIs and the D-F Act also granted to the Federal Reserve regulatory authority over thrift holding companies, encompassing many other well-known insurers. In addition, the D-F Act granted to the FDIC authority to wind up failing banks and other SIFIs. Thus, the Federal Reserve effectively oversees large segments of both the life and property-casualty industries and the FDIC has the power to supervise their dissolution.
Because the Federal Reserve and FDIC govern the banking industry, the new Insurance Task Force will examine questions regarding the systemic role of insurers in the economy and how the federal government’s regulation of insurance should differ from its regulation of banking. It will also examine whether the current system of regulation adequately protects policyholders and the relationship between global insurance regulation and U.S. regulation.
The Insurance Task Force will be co-chaired by Republican William H. McCartney, former president of the NAIC and Nebraska State Insurance Commissioner, and Democrat Robert E. Litan, regulatory policy scholar and former Clinton administration official.