LegiStorm

Summary:

Insurance companies constitute a major segment of the U.S. financial services industry. The insurance industry is often separated into two parts: (1) life and health insurance companies, which also often offer annuity products, and (2) property and casualty insurance companies, which include most other lines of insurance, such as homeowners insurance, automobile insurance, and various commercial lines of insurance purchased by businesses. Different lines of insurance present very differe nt characteristics and risks. Life insurance typically is a longer - term proposition with contracts stretching over decades and insurance risks that are relatively well defined in actuarial tables. Property and casualty insurance s typically are shorter - term proposition s with six - month or one - year contracts and ha ve greater exposure to catastrophic risks. Since 1868, t he individual states have been the primary regulators of insurance with the National Association of Insurance Commissioners (NAIC) acting to co ordi nate state action s and collect national data. In accordance with the 1945 McCarran - Ferguson Act, th e states have operated as the primary insurance regulators with c ongressional blessing , but they have also been subject to periodic congressional scrutin y. Immediately prior to the 2007 - 2009 financial crisis, congressional attention on insurance regulation focused on the inefficiencies in the state regulatory system. A major catalyst was the aftermath of the Gramm - Leach - Bliley Act of 1999 (GLBA ; P.L. 106 - 102 ), which overhauled the regulatory structure for banks and securities firms, but left the insurance sector largely untouched. The financial crisis refocused the debate s urrounding insurance regulatory reform. Unlike many financial crises in the past, insurers played a large role in this crisis. In particular, the failure of the insurer American International Group (AIG) spotlighted sources of systemic risk that had gone u nrecognized. The Dodd - Frank Wall Street Reform and Consumer Protection Act ( Dodd - Frank ; P.L. 111 - 203 ), enacted following the crisis, gave enhanced systemic risk regulatory authority to the Federal Reserve and to a new ly created Financial Stability Oversight Council (FSOC). The Dodd - Frank Act also included measures affecting the states ’ oversight of surplus lines insurance and reinsurance and created a new Federal Insurance O ffice (FIO) within the Department of the Treasury. Following the financial crisis and Dodd - Frank, international insurance issues have been of greater interest to Congress. In particular, the development of various regulatory standards by the International Association of Insurance Supervisors (IAIS) has been the subject of both hearings and legislation . In addition, using Dodd - Frank authorities, t he United States negotiated a covered agreement with the European Union (EU) addressing a long - sta nding dispute over reinsurance collateral as well as questions about how U.S. insurers would be treated under the EU’s new “Solvency II” regulatory regime. A variety of l egislation addressing insurance regulatory issues has been introduced in the 115 th Con gress with one bill enacted . I ssues recurring in multiple bills include amendments to the Dodd - Frank Act provisions on FIO and FSOC ( P.L. 115 - 61 ; H.R. 10 ; H.R. 3861 ; H.R. 4483 ) and international insurance s tandard negotiations ( S. 1360 ; H.R. 3762 ; H.R. 4537 ; S. 2155 ). Individual legislation has been introduced on other topics, including licensing of insura nce claims adjusters ( H.R. 3363 ) and racial disparities in automobile insurance ( H.R. 4885 )