Not too long ago, the U.S. House of Representatives and Senate seemed poised to sign off on a bill that would amend part of the Dodd-Frank Wall Street Reform and Consumer Protection Act to clarify that insurance agencies did not have to conform to bank capital rules. However, it now seems that change hangs in the balance.
The bill in question seemed all set to advance through the House, but the Financial Services Committee instead decided to attach to it a provision related to the National Association of Registered Agents and Brokers. Further action is now being delayed because members want to attach another bill to it on top of that, according to a report from Life Health Pro. This has all the hallmarks of political maneuvering, because the amendment to the Dodd-Frank act has extremely broad support; it passed the Senate unanimously, and thus attaching a less popular financial services bill to it could potentially have the effect of getting them both killed.
What could be next?
At the present time, there is some ambiguity about what bill might end up being attached to the so-called Collins Amendment, the report said. At least one of the proposed bills would make it more difficult for the Federal Stability Oversight Council (FSOC) to designate certain financial institutions as "systemically important," for a period of as little as six months, or as long as one year. Another would make that same FSOC subject to the Government in the Sunshine Act, which would allow all members of Congress who oversee that council to attend its meetings. Currently, only the heads of those various watchdogs are able to sit in on those meetings. Those members newly allowed entrance to the Council meetings would also be able to vote indirectly on the FSOC's proposals.
This change might be a source of frustration to many life insurance companies going forward, because the ways in which banks are required to have funds in reserve have always varied greatly from those of insurers. However, there's little that can be done at this time, other than wait for the new bills to go through. Until that time, they may need to continue to approach their reserving very cautiously. This may be especially true as they still work to broaden the number of clients they have aboard, through more outreach efforts, as the economy slowly continues to improve.