Reform of US financial regulation has
taken a leap forward following the approval of the 2,000 page
Dodd-Frank Wall Street Reform and Consumer Protection Act by the
House of Representatives. With the bill’s passage through the
House, state insurance regulators are breathing a sigh of relief
that its focus is primarily draconian banking regulation reform and
leaves their authority largely unchanged.

During intense debate on reform, insurance
industry leaders stressed that the problems that beset the banking
and securities sectors during the economic crisis were largely
absent in the insurance sector.

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National Association of Insurance Commissioners
president Jane Cline said: “We commend the conferees for
recognising this important distinction and for preserving the key
role of state insurance regulators in the nation’s financial
markets.”

The bill’s only notable implication for
insurers is a Federal Insurance Office (FIO). The FIO would be
tasked with advising Congress and the administration on
insurance-related issues and to help negotiate international
regulatory agreements.

“We were pleased to see that the Federal
Insurance Office set up under the bill is narrowly designed to
carry out its mission while not unnecessarily undermining strong
state regulation,” said Cline.

Also to be established under the proposed act
is a Consumer Financial Protection Agency (CFPA). Again the
insurance industry is largely left untouched.

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On the CFPA, the American Council of Life
Insurers commented: “We’re pleased that the legislation largely
excludes life insurance products from CFPA jurisdiction. We will
closely monitor and, if necessary, participate in the rule-making
process to assure our products are not inadvertently affected.”