Late last week, MetLife announced it is challenging the Financial Stability Oversight Council’s (FSOC) proposal to classify the insurance company as a systemically important financial institution (SIFI). If MetLife loses its suit, it will become the third non-bank financial institution forced to meet stricter oversight standards by the Federal Reserve.

Now that MetLife has announced its intent to challenge the designation, the FSOC has 30 days to schedule a hearing, and 60 days after that hearing to announce its final determination.

The FSOC was created as part of the Dodd-Frank and may recommend to the Federal Reserve elevated financial standards and capital requirements for bank and non-bank financial institutions (including insurance companies) that potentially pose a “systemic risk” to the financial system. As part of its criteria for determining a SIFI, the Council looks at non-bank institutions that have at least $50 billion in assets and have substantial exposure to credit default swaps, other derivatives and debt.

The Big “I” continues to actively convey the importance of distinguishing the business models of insurance from other financial services institutions, especially property-casualty. In order to keep the SIFI classification narrowly defined, the association believes determining criteria for banks should be substantially different from that of insurance. Along those lines, the Senate and House each introduced a bill in late September which would provide relief to insurers categorized as SIFIs by not requiring the Federal Reserve to impose bank-centric capital standards on insurance companies. Both the Senate and House have passed separate versions of this bill and the Big “I” is supportive of these measures. 

Jen McPhillips is Big “I” senior director of federal government affairs.