50 Pages Posted: 15 Jun 2013 Last revised: 21 Jun 2013
Date Written: May 30, 2013
Prior to the financial crisis, insurance was the only financial service that did not have a federal regulator but relied almost exclusively on state insurance regulators. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) began a process to address this lack of federal oversight by creating the Federal Insurance Office (FIO) within the U.S. Treasury Department. Before the crisis, state regulation of insurance was sharply criticized for its lack of uniformity, its inefficiency, and the impediments that it posed for developing international insurance norms. In the wake of the financial crisis, questions have also been raised about whether state insurance regulation was equipped to deal with the potential systemic risks posed by the insurance firms, like American Insurance Group, Inc.
The Dodd-Frank Act contains provisions that begin to tackle each of these issues, primarily through the creation of FIO. This Article will look at the creation of FIO and the role that FIO is playing to address the systemic risks posed by insurance and insurance-like products and firms and the development of insurance norms. This Article will also examine the arguments raised by many within the insurance industry that greater federal oversight of insurance is unnecessary because the state regulation already provided adequate solvency protections, insurance companies do not pose the types of systemic risks posed by banks and investment firms, and market discipline is stronger in the insurance industry than in the banking industry.
Keywords: Insurance, Regulation, Financial Services, International Financial Regulation
JEL Classification: F23, F30, G22, G28, H70, K20, K23, K33, L50
Suggested Citation: Suggested Citation
Brown, Elizabeth F., Will the Federal Insurance Office Improve Insurance Regulation? (May 30, 2013). University of Cincinnati Law Review, Vol. 81, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2279001