US insurance office opens new doors
The US Government now has the ability to work with other insurance regulators following the introduction in July of the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to Deputy Treasury Secretary Neal Wolin.
Speaking last week at a conference organised by the London Stock Exchange, he said the new law establishes the Federal Insurance Office (FIO) – he first central body for the US industry.
Mr Wolin says the new office will help in “modernising and improving our system of insurance regulation”.
While regulatory power for insurance in the US remains with the states, the US Treasury Department will now be “better able to work with other nations to increase international co-operation on insurance regulation, enhancing our collective efforts in addressing risks posed to the financial system”.
“The FIO will be actively involved in working with representatives of other countries on reinsurance collateral and US equivalence under the Solvency II regulations,” he said.
He says that prior to the introduction of the Dodd-Frank Act, “loopholes allowed large parts of the financial industry to operate without oversight, transparency, or restraint”.
Describing the Dodd-Frank Act as “the most significant financial reforms since the 1930s”, Mr Wolin says it builds a stronger financial system by addressing major gaps and weaknesses in regulation.
“The global financial crisis highlighted the lack of expertise within our government regarding the insurance industry,” he said. The FIO will monitor for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system; gather data and information on the industry and insurers; and co-ordinate policy in the insurance sector.
“In the process of becoming a member of the International Association of Insurance Supervisors, where [the FIO] will represent the US, the Secretary of the Treasury, together with the US Trade Representative, is now empowered to negotiate certain international agreements regarding prudential insurance measures.”