On Tuesday, U.S. Senate Banking Committee Chairman Richard Shelby (R-Alabama) released a discussion draft of a bill entitled the “Financial Regulatory Improvement Act of 2015.” To date, the draft bill contains eight titles and addresses a variety of financial services issues, including insurance.

The contents of the bill, which many are describing as one of the largest financial services overhaul bills since Dodd-Frank, are still fluid as negotiations amongst Banking Committee members are ongoing. The Committee has planned a mark-up of the legislation or Thursday, May 21.

Of importance to the Big “I” is title IV of the draft: “Improved Accountability and Transparency in the Regulation of Insurance.” The first of the three sections under the insurance title sets forth a “Sense of Congress” that “the McCarren-Ferguson Act of 1945 remains the preferred approach to regulating the business of insurance.” The Big “I” has long been a steadfast supporter of the state regulatory system and strongly agrees with this bedrock principle. 

The draft also includes language from the “Policyholder Protection Act of 2015,” a top issue the Big “I” addressed at its recent Legislative Conference in April. The association supports the legislation and has worked closely with the NAIC and other supporters of state insurance regulation. The bill clarifies that state insurance regulators retain the authority to wall off insurance company assets designed for the benefit of insurance company policyholders and extends this authority to insurers that are organized as bank holding companies or part of diversified financial institutions. This language is necessary because it clarifies some ambiguities within Dodd-Frank and ensures state regulators have the authority to protect the assets of insurance companies that are part of larger institutions. The Big “I” believes it is ill-advised for insurers to have to “bail out” a bank with assets that are marked for the interests of its policyholders and strongly supports this important consumer safety provision in the draft.

The final section of the insurance title addresses issues of transparency among the entities involved in the creation of international insurance capital standards. The draft attempts to increase the transparency of this process by establishing an advisory committee at the Federal Reserve and by requiring reporting timelines as the international discussions progress.

In a statement on behalf of the Big “I,” Charles Symington, Big “I” senior vice president of external and government affairs, said: "The Big 'I' would like to commend Senate Banking Committee Chairman Richard Shelby (R-Alabama) for his leadership and work on the recently released discussion draft of the 'Financial Regulatory Improvement Act of 2015.' The Big ‘I’ and our thousands of members across the country appreciate the draft’s reaffirmation that the state system is the preferred approach for regulating the insurance market. We also appreciate the inclusion of the 'Policyholder Protection Act', which bolsters state insurance regulators' ability to protect policyholder assets and insurance consumers. Finally, we thank the Chairman for his efforts to increase transparency surrounding the negotiation of international capital standards. We look forward to working with the entire Banking Committee on this important piece of legislation."

Keep an eye on next week’s issue of the News & Views e-newsletter for continued coverage on the draft bill’s mark-up which is expected to contain more details on the insurance title of the legislation.

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