WASHINGTON –Thomas R. Sullivan, former Connecticut insurance commissioner, was named as the senior advisor for insurance to the Board of Governors of the Federal Reserve System.
The appointment was confirmed by a Fed spokesman who said that Sullivan starts his new job June 9. Sullivan, who is 52, had most recently been a partner at PricewaterhouseCoopers.
According to an e-mail to colleagues in the insurance sector, Sullivan will represent the Fed at all domestic and international insurance forums. “I am excited to be joining the Fed and there is a lot of work to be done given their statutory authority as consolidated regulator for the designated insurer non-bank SIFI’s (Systemically Important Financial Institution) and the insurer owned SLHC’s (Saving and Loan Holding Companies),” Sullivan wrote.
Sullivan, a Republican, stepped down under fire as Connecticut’s insurance commissioner in 2010 after approving a large health insurance rate increase for Aetna that earned the ire of consumer groups and the Department of Health and Human Services. He had served for three years as insurance commissioner, and was a former top official at The Hartford, serving in various jobs before being named insurance commissioner in 2007 by then Gov. Jodi Rell. His last post at The Hartford was in the property/casualty area, but as Connecticut insurance commissioner he chaired the NAIC’s Life Insurance and Annuities Committee.
The announcement comes as insurance companies and the NAIC push back against federal and international regulatory requirements. Meanwhile, the Senate will take up legislation Tuesday that would reauthorize the Terrorism Risk Insurance Act.
However, the industry is asking that other provisions be added. A strong possibility for inclusion as an amendment is separate legislation S. S. 2270, the “Insurance Capital Standards Clarification Act of 2014.”
This legislation would revise Sec. 171, a provision of the Dodd-Frank financial services reform law. This requires the Federal Reserve to apply bank capital rules to insurance companies it supervises.
The S. 2270 and the companion House bill H.R. 4510 clarify that the Fed can apply insurance-based capital standards to the insurance portion of the business, while still keeping banking capital standards for the banking portion of the business.
The legislation also prevents the Fed from requiring mutual insurance companies such as State Farm from preparing financial statements in accordance with generally accepted accounting principles, when they are already preparing financial statements in accordance with state-based statutory accounting principles. Other provisions seeking to reaffirm state oversight of insurance could also be proposed, although industry lobbyists say the battle over that issue is more likely to come up when the House acts on TRIA.
For example, 49 House members sent a letter to the House Appropriations Committee on May 29 asking that 48 other members request legislative and report language in the Treasury and Federal Reserve Board appropriation bills be designed to ensure that U.S. federal officials halt negotiating European-centric, bank-like capital standards for internationally active U.S. insurers.
Meanwhile, The American Council of Life Insurers took out a full-page advertisement in Roll Call on May 28, which will be repeated in Politico June 4, highlighting the life insurance industry’s support for S. 2270 and the House companion legislation H.R. 4510. “This issue is vitally important to ACLI and its member companies,” the advertisements say.