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Impact of the Dodd-Frank Act on the Insurance Industry

Release Date: July 22, 2010


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After much debate and discussion, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") has been signed into law by President Obama.   Although the Act is often discussed as a means to overhaul the regulation of financial institutions, it contains a number of provisions which will directly impact the insurance industry. Such provisions are briefly discussed below.

Establishment of a Federal Insurance Office
 
            The Act establishes a Federal Insurance Office (the "Office") within the Department of the Treasury. The Office is granted the authority to, among other things: (1) monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers, (2) monitor the extent to which traditionally underserved communities and consumers, minorities and low and moderate-income persons have access to affordable coverage, (3) recommend designation of an insurer or any of its affiliates as an entity subject to regulation pursuant to the Restoring American Financial Stability Act of 2010, (4) coordinate federal efforts and develop federal policy with respect to international insurance matters, (5) consult with states and state insurance regulators regarding insurance matters of national and international importance and (6) perform related duties and have further authorities as may be assigned to it by the Secretary of the Treasury. Significantly, it appears that without further action, the Office will not have any authority with respect to health insurance, long-term care insurance (except such insurance that is included with life or annuity insurance components) or crop insurance. To carry out its duties, the Office will have broad authority to gather information from various parties, including insurers and their affiliates, although it is expected to attempt to coordinate with other federal agencies and state insurance regulators beforehand to determine if the information to be collected is available from, and may be obtained in a timely manner by, such other sources.
 
            Significantly, the Act also provides that, no later than 18 months after the Office is established, the Office is expected to conduct a study and submit a report to Congress on how to modernize and improve the system of insurance regulation in the United States. Among other things, the study and report is expected to examine the costs and benefits of regulating certain lines of insurance at the federal level. This provision appears to leave the door open to further, more pervasive regulation of the insurance industry.  More....



This Jaeckle Alert, prepared by the attorneys at Jaeckle Fleischmann & Mugel, LLP, is intended for general information purposes only and should not be considered legal advice or an opinion on specific facts. For more information on these issues, contact one of the attorneys listed above or your existing Firm contact. Prior results do not guarantee a similar outcome. The invitation to contact is not a solicitation for legal work in any jurisdiction in which the contacted attorney is not admitted to practice. Any attorney/client relationship must be confirmed in writing. 
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