There are a number of changes that are lined up to occur throughout this week to fix the current situation.
Lawmakers from the U.S. Senate and House of Representatives are making insurance news as they prepare to tackle a law, this week, that will help to provide greater relief to large insurers against tight capital rules that had been designed with banks and other similar financial institutions in mind.
This repair has been nicknamed the Collins Amendment to the reform law, 2010 Dodd-Frank Wall Street.
This insurance news could mean that the repairs will give the Federal Reserve the ability to create more rigid buffers of capital so that they will be more complementary to the business structures of insurance companies. Talks have been occurring between New York Democratic Senator Chuck Schumer and Texas Republican House Financial Services Committee Chairman Jeb Hensarling and have been primarily focused on the extension of the backstop of federal terrorism insurance.
The insurance news involves working the Collins Amendment to the deal for TRIA.
Reuters reported that a source familiar with the matter explained that “They’ve been taking a close look at the Collins amendment and adding it to the TRIA deal,” referring to the Terrorism Risk Insurance Act that passed after the United States was attacked on September 11, 2001.
Also taking part in the talks, said the Reuters source, was Kevin McCarthy, the House Majority Leader. The vote on TRIA and the Collins Amendment is expected to be made separately, this week, or it may be incorporated into a broader federal budget deal.
A great deal of the drive to create the changes to the system have to do with two large insurance companies – Prudential and AIG – which are overseen by the Federal Reserve, and that have been deemed critical to the overall financial system’s health.
MetLife has also received this designation, but it has been fighting to have this label removed in an ongoing insurance news story. The Federal Reserve has expressed that the Collins Amendment would require insurance companies to adhere to the same capital standards that are applied to banks. It feels that repairs to this regulation are vital to insurers, which say that the business models under which they operate are critically different from those of banks.