U.S. House Financial Services Subcommittee Reviews Insurance Savings and Loan Holding Company Bill
Date Published: 03-08-2018
The U.S. House Financial Services Subcommittee on Housing and Insurance held a hearing yesterday, March 7, 2018, entitled "Legislative Review of H.R. 5059, the State Insurance Regulation Preservation Act."
The bill, which was introduced last month by U.S. Representatives Keith Rothfus and Joyce Beatty, would amend the Home Owners' Loan Act with respect to the registration and supervision of insurance savings and loan holding companies.
The witness panel included (click on the hyperlinks to access the individual testimonies):
- Mr. Michael Mahaffey, Chief Strategist and Risk Officer, Nationwide Mutual Insurance Company
- Mr. Kurt Bock, Chief Executive Officer, COUNTRY Financial, on behalf of the Property Casualty Insurers Association of America ("PCI")
- Professor Daniel Schwarcz, Professor of Law, University of Minnesota Law School
"H.R. 5059 embodies the Congressional intent of Dodd‐Frank and the growing consensus that Federal Reserve Board regulation of insurance savings and loan holding companies should be better coordinated with, and governed by proven effective state‐based insurance regulation," Mr. Bock said on behalf of PCI.
In addition to creating a definition of an Insurance Savings and Loan Holding Company ("ISLHC"), H.R. 5059 creates a regulatory framework that would limit the Federal Reserve's oversight of ISLHCs.
If the Federal Reserve does examine an ISLHC, H.R. 5059 would require that the supervisory framework be tailored to the risks and activities of the business of insurance, as well (in consultation with state insurance authorities) assure that framework does not duplicate or conflict with state insurance requirements.
Furthermore, H.R. 5059 would exempt an ISLHC from the Federal Reserve's oversight if the ISLHC meets or exceeds applicable state insurance capital standards; and meets or exceeds any minimum capital standards for an insurance savings and loan holding company.
"This hearing was held to review the proper balance of the Federal Reserve's supervision of Savings and Loan Holding Companies (SLHC's) primarily engaged in the business of insurance," said Subcommittee Chair Sean Duffy (R-WI). "Under Title 1 of the Dodd-Frank Act, the Fed was given supervisory and rule-making authority over SLHCs, in addition to its new authority to establish enhanced minimum leverage capital and risk-based capital requirements for insurers under that structure. It is important that we remember that the United States system of state-based insurance regulation has worked well for over 150 years."
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