Insurance companies are asking President Obama and his administration to slow down with their up and coming decision on if the industry, along with non-banking financial companies, warrant further scrutiny. The administration is eyeballing the market as being deemed as a potential risk to the financial standing of the country, along with banks, and should be put to higher standards in hopes to avoid the same financial meltdown of 2008.
According to the insurance industry, they would like the Treasury Department to hold the finalization of these rules and wait for the placement of a representative of the voting insurance in the Financial Stability Oversight Council (FSOC) and until the Federal Insurance Office new head assumes position.
Three organizations are involved with this request are: The American Insurance Association, Reinsurance Association of America and the American Council of Life Insurers. They claim that when the decisions are made without the appointments, they would be deprived of input into the making of federal rules. In addition to that, they are requesting for the FSOC to present how a proposal will be applicable to insurers.
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The supervision of a financial company by the Federal Reserve Board under the FSOC is covered by the Dodd-Frank Act wherein the company will be subjected to scrutiny if it is determined that it poses a threat to the country’s financial stability. There are ten factors given by the Dodd-Frank Act to be considered by the FSOC.
Further, the insurance industry is asking for more specificity regarding the standards of the FSOC when they assess non-bank institutions. It claims that the definitions of material financial distress, highly interconnected and financial stability are not that clear. The delay is requested by the insurance groups so that the meaningful standards of the FSOC can be implemented.