WASHINGTON–Treasury deputy secretary Neal Wolin told London stockbrokers today that the Obama administration believes the new financial services reform law gives it the power to monitor the insurance sector and coordinate and develop federal policy on major domestic and international insurance issues.
Wolin’s comments were made in a speech to the London Stock Exchange.
Wolin said in his comments on insurance that the federal government for the first time will be actively involved in international insurance issues.
The 2008 financial crisis “highlighted the lack of expertise within our federal government regarding the insurance industry,” he said. “In response, the act establishes the Federal Insurance Office which will provide the U.S. Government–for the first time–dedicated expertise regarding the insurance industry.”
The new Federal Insurance Office will monitor the insurance industry to look for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system; gather data and information on the industry and insurers; and coordinate policy in the insurance sector, he said.
The administration’s views of its broad authority for insurance under the Dodd-Frank law appears to conflict with the views of industry officials.
In letters about specific provisions of the law, for example, the “Volcker Rule” and creation of the Financial Stability Oversight Council, industry trade groups and individual institutions are advancing the view that they are already regulated, and any attempts by the federal government to monitor their activities will be intrusive and illegal dual regulation.
In his comments, Wolin said the law does not provide the Federal Insurance Office with general supervisory or regulatory authority over the business of insurance.
“The states remain the functional regulators,” he said. But through the FIO, “the federal government will work toward modernizing and improving our system of insurance regulation.”