Last month, Representatives Gary Miller (R-Calif.) and Carolyn McCarthy (D-N.Y.) introduced a bill that would prohibit the Board of Governors of the Federal Reserve System (the “FRB”) from imposing additional capital standards on insurers that are designated as systemically important financial institutions (“SIFIs”). Currently, under Section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Financial Stability Oversight Council is authorized to determine that a nonbank financial company (e.g. insurers and reinsurers) will be supervised by the FRB and subject to prudential standards if:
- “material financial distress” at the nonbank financial company could pose a threat to the financial stability of the U.S.; or
- the nature, scope, size, scale, concentration, interconnectedness, or mix of the nonbank financial company’s activities could pose a threat to U.S. financial stability.
If passed, H.R. 2140, entitled the “Insurance Capital and Accounting Standards Act of 2013,” would create a presumption that insurers, insurance affiliates and subsidiaries of insurers that comply with state-based capital standards meet the minimum capital requirements under the Dodd-Frank Act. However, the FRB may determine that the presumption is inapplicable to such entities on a case-by-case basis. Further, the bill prohibits the FRB from requiring that insurance companies comply with accounting standards that are different from those regulatory accounting standards applicable to insurance companies under state law.
The bill has been referred to the House Committee on Financial Services. No other actions have been taken at this time.
To see a copy of the bill, click here.