The Federal Reserve will soon release proposed capital rules for the insurance companies under its regulatory authority, according to Daniel Tarullo, Federal Reserve Board governor, who spoke before the National Association of Insurance Commissioners last week.

The Big “I” believes any proposal should respect current solvency rules and the state-based system of insurance regulation, which has protected consumers and promoted competitive insurance markets for more than 150 years.

Dodd-Frank gave the Federal Reserve authority to oversee insurance companies that were “too big to fail,” deeming them “systemically important financial institutions” (SIFIs). To date, only two insurers have been labeled SIFIs, and both companies remain subject to rigorous state oversight.

The Federal Reserve also has authority over the bank operations and assets of a small number of insurance companies organized as thrift-holding companies, but not the insurance operations or assets. The new rules will have two sets: one with more rigorous standards for SIFIs, and another applying to the banking operations of insurance companies the Federal Reserve oversees.

So far, insurer response to the details on the Federal Reserve’s forthcoming proposal has been relatively positive. However, the Big “I” is concerned that federal regulatory efforts and standard setting at the international level could lead to an erosion of the state-based system, market consolidation and an uneven playing field for insurance companies—eventually resulting in fewer markets for independent agents.

Therefore, the Big “I” supports legislation to help ensure that any potential international standards do not encroach on the state-based system of insurance regulation. Most recently, in April, Rep. Blaine Luetkemeyer (R-Missouri), Chairman of the House Financial Services Housing and Insurance Subcommittee, introduced H.R. 5143, the “Transparent Insurance Standards Act of 2016.” The Big “I”-endorsed bill aims to create procedural “checks” for federal officials in international insurance negotiations to ensure the U.S. state-based system of insurance regulation remains strong.

Jennifer Webb is Big “I” federal government affairs counsel.