WASHINGTON BUREAU — The new Financial Stability Oversight Council (FSOC) is asking for comments on the criteria it and other regulators should use when deciding whether the FSOC ought to oversee an insurance company or other nonbank financial company.
Section 113 of the new federal Dodd-Frank Wall Street Reform and Consumer Protection Act gives the FSOC the authority to impose extra federal oversight on insurers and other nonbank financial companies that appear to pose a threat to U.S. financial stability.
If a large insurer appeared to be in serious trouble, and insurance regulators in the insurer’s home state were unhelpful, the FSOC could work with the Federal Insurance Office and the Federal Reserve Board to have the Federal Deposit Insurance Corp. force the insurer into a liquidation process governed by the laws and regulations of the insurer’s home state.
The American Insurance Association (AIA), Washington, says all insurers should respond to the FSOC request for comments.
The comment process “will allow us to reinforce with the Financial Stability Oversight Council the unique nature of our industry, the financial strength that underlies our business model, and the current financial regulatory standards that support that model,” AIA General Counsel Stef Zielezienski says.