The U.S. Federal Reserve hopes that Friday will use this opportunity for proposals for capital and other rules for insurers.
The U.S. Federal Reserve has announced that June 3, 2016 will be the date for its open meeting in which proposals will be discussed with regards to federal insurance regulations for rules including capital and other factors affecting insurers.
This Friday’s meeting will be centered around changes in regulations that have been building for over five years.
The announcement from the American central bank was made following the preview of the proposals by Fed Governor Daniel Tarullo. A week after Tarullo made his speech to insurance commissioners from across the country, the open meeting was announced. Among the main federal insurance regulations proposals that will be discussed will be rules with regards to the amount of money capital regulators will require insurers to have available to them at any given time in order to stave off the risk of over-borrowing or insolvency.
Those new federal insurance regulations are expected to apply to a large segment of the industry.
The Fed is also expected to use the open meeting for the release of the rules that have been proposed for the insurers that have been called “too big to fail.” Those very large insurance companies will see new rules meant to help to avoid risks to the stability of the financial status of the United States.
These changes in insurance industry regulations are not coming out of the blue. For more than five years, they have been in the works as the Dodd-Frank Wall Street reform law which passed in 2010 required new measures that would help to prevent a repeat of the financial crisis from which a full recovery has yet to be made.
Tarullo explained that there will be two tracks of federal insurance regulations proposals. The first will be for smaller holding companies such as those that own banks. The other will be for insurance companies that are deemed to be systematically important. It is the companies in those second category that are seen to hold some of the U.S. financial stability in their hands and will therefore be seeing a change in the capital rules in order to prevent a repetition of the situation in the last economic crisis.