Wednesday, November 21, 2012

Among other wailing and teeth-gnashing in the wake of President Obama’s re-election are industry predictions that insurance companies will be subject to enhanced federal oversight during the second term. Based on early reactions, the federal microscope seems to be most unwelcome.

According to Law360 (subscription required), the industry can expect closer scrutiny from the likes of the Federal Insurance Office (FIO) “and an emboldened Consumer Financial Protection Bureau.”

Among the predictions is that a second Obama Administration will see more insurers being named “Too Big to Fail,” a move that brings significantly more oversight and regulation. According to Law360:

It's very unlikely that the insurance industry will escape totally any of their companies being named SIFIs," (Howard Mills, director and chief adviser of Deloitte LLP's insurance industry group) said."The FSOC [Financial Stability Oversight Council, established under Dodd-Frank] isn't going to go away.

Now that the election is over, the FIO is expected to issue its long-awaited report on modernizing supervision of insurers. Law360 previously reported that the report was held back because of political considerations (why poke a bear when you can let it sleep for a few more months?), so perhaps the report is forthcoming … at last.