Insurance has traditionally been regulated by the States, but through Dodd-Frank, increased federal regulation of life insurance companies is inevitable. While regulation from federal regulators might be unwelcome for some companies and state insurance regulators, it is important for them to understand and comply with the Dodd-Frank regulation.
Gary Hughes, executive vice president and general counsel for the American Council of Life Insurers, recently told federal lawmakers on the U.S. House Financial Services Committee that state insurance regulators are growing more accepting of the role new regulatory controls play in their sector, according to a report from Life Health Pro.
That is not to say, however, that the industry agrees with all of the alterations it has faced in the past few years, the report said. Many of the issues now facing companies that offer life insurance relate back to the ways in which the Federal Reserve Board interprets the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Hughes said that the Fed in some ways treats life insurers like it banks, which does not really take into account the various differences between their two industries.
What else was said?
Hughes also asked the regulators who oversee the life insurance industry to do more in the future to work together on setting standards, the report said. He noted that the Fed, International Association of Insurance Supervisors, European Union, and state governments often have wide-ranging regulations for capital requirements, and that can make it more difficult for insurers to comply with the various issues they face.
Certainly, life insurance issuers will have to keep closer tabs on the regulatory changes they may face in the near future. By being proactive when designing new products and making alterations to existing products to acclimate to potential changes in regulations will help issuers maintain existing policyholders and bring in new policyholders. The more they do to prepare for any eventuality may give them a greater chance for success once changes are made.