Mutual insurers are pleased with a new proposal that makes it clear they would continue under state regulation and not be governed by the liquidation provision of the new federal Dodd-Frank Act.
The proposed rule issued by the Federal Deposit Insurance Corporation (FDIC) recognizes state regulation of mutual insurance holding companies while providing insurers with greater certainty and clarity, according to the National Association of Mutual Insurance Companies (NAMIC).
“The FDIC is right to propose that mutual insurance holding companies continue to be under the jurisdiction of state regulators, and not treated separately from other insurance companies,” said Charles M. Chamness, president and CEO of NAMIC.
NAMIC has been advocating against “duplicative and unnecessary regulation” since Washington began debating what to do following the 2008 financial crisis. Chamness said the FDIC’s proposed regulation is consistent with his group’s view.
The proposed rule, published in today’s Federal Register, would specifically state that a mutual insurance holding company would be included under the definition of “insurance company” as defined by the Dodd-Frank Act. As such, mutual insurance holding companies would remain under the regulatory jurisdiction of the states, and would not be subject to the FDIC’s orderly liquidation authority created as part of the Dodd-Frank Act.
“Congress was very clear in crafting the Dodd-Frank Act that it would defer to the state-based regulatory system for property/casualty insurance,” Chamness said. “Both of the law’s namesakes said specifically on the House and Senate floor that they did not intend for mutual insurance holding companies to be under the FDIC’s authority. Today’s proposed rule will ensure that the FDIC remains true to that intent.”
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