Members of Congress and their aides could be thinking a lot more about homeowners insurance and banks during this spring's tax and budget fights than they are about life insurance and annuities.
Analysts at the Congressional Research Service, the arm of Congress that helps the people who work on Capitol Hill learn the policymaking basics, have hinted at that possibility in a new primer on the U.S. insurance market.
CRS analysts posted the insurance primer Tuesday, along with primers on banking, credit unions, consumer finance, housing finance, derivatives, the capital markets, international financial services regulation and cryptocurrency.
One sign most lawmakers may not be focusing heavily on changes in rules for life insurance and annuities: The new insurance report includes a section on the "disruption in the property insurance regulations" caused by wildfires, weather events and tough price regulation, but it does not mention estate or gift taxes.
Here are seven things that are in the new insurance report and that might be on policymakers' minds.
1. The life and health insurance market is separate from the property and casualty insurance market.
Analysts mention that the life and health market also includes the annuity market.
2. Life and annuity products expose the issuers to long-term risks.
"Life insurance is typically a longer-term proposition, with contracts stretching over decades and insurance risks that are relatively well defined in actuarial tables," the analysts write. "Annuity products, which are also usually offered by life insurers, present similar long-term insurance risks."
3. Some life and annuity products may expose the holder to fluctuations in the investment markets, and some don't.
Some life insurance and annuity products "may be based on securities, such as stocks or bonds, and thus may present shorter-term risks more similar to investment products for both the consumer and the insurer," according to the analysts.
4. The federal government is not heavily involved in life insurance, annuities and insurance products.
"The role of the federal government in regulating private insurance is relatively limited compared with its role in banking and securities," the analysts write. "Insurance companies, unlike banks and securities firms, have been chartered and regulated solely by the states for the past 150 years. There are no federal regulators of insurance akin to those for securities or banks, such as the Securities and Exchange Commission or the Office of the Comptroller of the Currency, respectively."
5. Because of congressional actions and U.S. Supreme Court decisions, states dominate regulation of insurance.
"States regulate the solvency of the companies and the content of insurance products as well as the market conduct of companies," according to the analysts. "Although each state sets its own laws and regulations for insurance, the National Association of Insurance Commissioners (NAIC) acts as a coordinating body that sets national standards through model laws and regulations. Before having legal effect, models adopted by the NAIC must be enacted by the states, which can be a lengthy and uncertain process. The states have also developed a system of guaranty funds designed to protect policyholders in the event of insurer insolvency."
6. One insurance policy issue for Congress is how to treat any risks insurers might pose to the financial system.
The analysts note that financial regulators are not currently classifying any insurers as "systemically important financial institutions."
7. Another insurance policy issue for Congress is what to do about insurance company financial standards.
"Banking and insurance present different risk profiles, and it is generally accepted that they require different capital standards," the analysts write.
The analysts point out that the Federal Reserve has tried to set capital requirements for the insurers that it supervises and that Congress responded by considering a bill that could have required the Fed to give more deference to state insurance regulators.
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