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A new memo is currently circulating to propose legislation removing that status from massive insurers.

Representative Jeb Hensarling (R-Texas) is circulating a memo to remove insurance industry giants from their “too big to fail” designation. The memo stated that proposed legislation would take that status away from even the biggest insurers in the country.

The designation was granted to MetLife, AIG and Prudential immediately following the recent financial crisis.

A regulatory consortium, the Financial Stability Oversight Council, deemed the insurance industry giants as “systematically important” to the American economy. That designation meant that if any of those insurance companies should fail, the impact on the economy would be broadly damaging.

However, CNBC reported that Rep. Hensarling has released a memo which, among other things, stated the intention to propose legislation that would “remove remaining nonbank SIFI references.”

This would remove insurance industry giants from the designation but would leave large banks in place.

Insurance Industry Giants - Metlife Building New York The category of being systematically important comes with a considerable regulatory cost. That said, Hensarling’s memo implied that it would continue to be worthwhile to keep large banks within that designation. Being “too big to fail” means that there is strict government oversight required and that the institution is required to carry sizeable additional capital in order to prevent itself from having to be bailed out in a time of financial crisis.

While the designation does sound impressive for insurers, insurance companies and other industry giants don’t necessarily feel that they benefit from it. General Electric, for example, deliberately sold its GE Capital unit to be able to divest itself of the designation.

Last year, Hensarling proposed draft legislation titled the “Financial Choice Act 1.0.” Its purpose was to withdraw the Financial Stability Oversight Council’s power to determine which firms have systemic importance to the American economy.

As of the time of the writing of this article, it has not yet been made clear which of Hensarling’s provisions will make their way through the Senate without being eliminated. That said, the memo he issued indicated that the priority was made for investors to provide insurance industry giants the assistance they required, at least for now.

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