Insurers that own a savings and loan bank are hoping that legislation designed to streamline oversight by the Federal Reserve will be taken up by the Senate Banking Committee in the lame-duck session of Congress after the midterm elections, if not in the new year.
The House handily passed by voice vote in mid-September a slimmed-down version of the State Insurance Regulation Preservation Act, H.R. 5059, which was introduced by Reps. Keith Rothfus, R-Pa., and Joyce Beatty, D-Ohio.
The bill is now before the Senate Banking Committee.
Owning a thrift automatically places insurers under Fed supervision in addition to oversight from their domiciliary state insurance regulator and other states in which they do business.
Insurers are seeking efficiencies in the federal-state system by banishing overlapping or redundant supervisory requests in favor of a system that recognizes their primary structure as an insurer.
There are fewer than a dozen insurance savings and loan holding companies (ISLHC) remaining, down from almost 30 after passage of the 2010 Dodd-Frank Act.
Currently, the Fed is working on capital standards for the ISLHCs under a framework called the “building-block approach,” which is seen as not too dissimilar from state regulatory measurements, although the rules are not yet final.
Jack Dolan, spokesman for the American Council of Life Insurers, told ThinkAdvisor that the Fed’s oversight “must take into consideration the unique aspects of the business of insurance and the state-based regulatory system.”
Dolan called the bipartisan legislation flexible and tailored to insurance entities, without precluding federal regulation in certain circumstances.