Capital Standards for Insurers
The Dodd-Frank Act was amended ("Collins amendment") to clarify that the capital requirements for insurers be insurance-centric, not bank-centric.
Chairman Shelby (R-AL) opened the hearing by asking the Federal Reserves' Mr. Mark Van Der Weide when the Fed expects to release the proposed rulemaking for setting capital standards for insurers. In response, Mr. Van Der Weide stated they were still in the "data collection and analysis phase" and he would not be able to provide a timeframe for the release of the proposed rulemaking.
Sen. Kirk (R-IL) then asked Mr. Van Der Weide about the implementation of the Collins amendment and if there was anything that could be done to speed up the process. Mr. Van Der Weide reiterated his support of the Collins amendment and explained that implementing capital standards for insurers is "challenging" since the framework for those standards must fit insurers of all sizes and in all markets.
In conclusion, Congress and insurers must wait for the Federal Reserve to complete collecting and analysing data before a proposed rulemaking is issued.
International Insurance Issues: Tester/Heller Legislation
Senators Tester (D-MT) and Heller (R-NV) asked the witnesses about international insurance standards and agreements. The Senators have introduced the International Insurance Capital Standards Accountability Act in order to "establish critical principles and increase Congressional oversight of the Federal Reserve and Treasury Department in order to ensure our best interests are represented at international insurance discussions." Part of their concern is that International Association of Insurance Supervisors' (IAIS) are closed to the public and lack transparency, accountability and collaboration.
- Establishes an Insurance Policy Advisory Committee on International Capital Standards and other Insurance Issues at the Federal Reserve.
- Requires the Federal Reserve and Treasury Department to annually issue a report and give Congressional testimony on insurance activities at the International Association of Insurance Supervisors and Financial Stability Board.
- Compels the Federal Reserve and Treasury Department, in consultation with the National Association of Insurance Commissioners, to complete a study on the impacts on consumers and markets in the U.S. before supporting any international insurance proposal or international insurance capital standard.
- Supports efforts to increase transparency and public observer access to working groups and meetings at the International Association of Insurance Supervisors.
CaptivesRanking member Brown (D-OH) asked NAIC's Kevin McCarthy about captive ("shadow") insurance because Sen. Brown believes the NAIC needs to strengthen its' proposal on "shadow insurers."
Commissioner McCarty replied that the NAIC is currently engaged in the process to "strengthen" the proposal and also "close loopholes in the regulation of captives."
Witnesses and links to opening remarks:
- Mr. S. Roy Woodall, Jr., Independent Member with Insurance Expertise, Financial Stability Oversight Council;
- Mr. Mark Van Der Weide, Deputy Director, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System;
- Mr. Michael McRaith, Director, Federal Insurance Office, U. S. Department of the Treasury; and
- Mr. Kevin McCarty, Commissioner, Florida Insurance Department, on behalf of the National Association of Insurance Commissioners.