Regardless of personal party affiliation, insurance industry leaders and advocates feel that Tuesday’s victory for the nation’s Republicans warrants some legitimate concerns for the industry.
In addition to concerns over the nature of a potential Terrorism Risk Insurance Act reauthorization, rumors have abounded over the future of the Affordable Care Act and employee benefits subsidies. With strong ties to the states’ rights movement, this year’s crop of Republicans indeed seems to be committed to limiting federal involvement in the insurance industry.
However, there may be a bright side to this focus on scaling back government oversight.
While it is believed the now lame-duck Congress will pass legislation altering the Dodd-Frank Act to exempt insurance companies from requirements that currently apply to banks, experts anticipate there is even more government retreat from the industry planned—particularly in key areas currently making insurers unhappy.
Gary Goldberg, a principal in Dentons’ public policy and regulation practice, told Law360 the presumptive future chairman of the Banking Committee—Sen. Richard Shelby of Alabama—is likely to advance the cause of increasing transparency in the Financial Stability Oversight Council’s process of identifying “systemically important” financial organizations.
The insurance industry has particularly resented this SIFI designation, and
MetLife recently made headlines by traveling to the nation’s capital to fight its “systemically important” tag.
Shelby is also apt to “clip the wings of the [Consumer Financial Protection Bureau],” which has brought actions against banks for unfairly selling insurance as an “add-on” product, Goldberg said.
“Whether through legislation or oversight, many committee Republicans will push the CFPB to stay in its lane and resist taking any steps that even arguably might breach the prohibition against the CFPB’s having any jurisdiction over insurance,” he told Law360.
The Federal Insurance Office’s power may also be curtailed.
Industry representatives believe a Republican Senate may push back against the FIO’s authority to “preempt” a state insurance law if it feels the law creates “less favorable treatment” for a non-US insurer subject to a covered agreement than a US insurer.
