WASHINGTON BUREAU — The Financial Stability Oversight Council (FSOC) provisions in the Dodd-Frank Wall Street Reform and Consumer Protect Act may be conflicting with the Federal Insurance Office (FIO) provisions.
Insurance industry lawyers are talking about the potential collision as FSOC begins to form plans for monitoring large insurers.
The FSOC is responsible for helping federal regulators track risks that could pose a threat to the U.S. financial system, and it is working on a proposal describing the criteria it will use to determine whether an insurer presents enough of a potential threat to economic stability to be monitored by the Federal Reserve Board.
The FIO is supposed to conduct a thorough review of insurance regulation this year and deliver a report that includes recommendations for ways to improve the insurance regulatory system in early 2012, according to Sam Caligiuri, a partner at Day Pitney L.L.P., Hartford.
Depending on how broadly the FSOC defines federal power in its final regulations, the FSOC regulations could have the effect of pre-empting the recommendations that the FIO is supposed to make to Congress in early 2012, Caligiuri says.