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VI. Principal Regulatory Developments Affecting Insurance Companies
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2. New G-SII List
On November 3, 2015, the FSB, in consultation with the IAIS, identified a list of nine G-SIIs. The list was the result of the FSB’s third annual assessment and differed from the previous years’ lists by removing Italy-based insurer Assicurazioni Generali SpA and adding life insurer Aegon NV. The current G-SII list also includes American International Group, Inc., MetLife, Inc., Prudential Financial Inc., Prudential plc, Allianz SE, Aviva plc, AXA S.A., and Ping An Insurance (Group) Company of China, Ltd. The FSB postponed a decision regarding the G-SII status of major reinsurers pending further refinement of the G-SII assessment methodology.
The IAIS is working on two projects related to G-SIIs—an update to the G-SII assessment methodology (including as the methodology relates to reinsurers) and a review of the definition of “non-traditional non-insurance activities” as relates to G-SIIs—and has released consultation documents on these topics.
G. OtherFederalDevelopments
1. Policyholder Protection Act
Demonstrating the effort on the part of some in Congress to limit federal regulatory authority over the insurance industry, the Appropriations Act included a provision known as the “Policyholder Protection Act” (the “PPA”). Under the PPA, federal bank regulators are prohibited from using an insurance company’s assets that are designated to pay insurance claims for the purpose of “bailing out” an affiliated financial institution. The legislation also amends provisions of the Dodd-Frank Act and limits the ability of the FDIC to seize insurance company assets intended to pay claims when an affiliated financial institution is subject to liquidation— it requires the FDIC to notify state insurance regulators of its intent to take a lien on an insurance company’s assets, and to consult with them on the impact such a lien would have on the insurance company and its policyholders. The PPA’s passage was supported by industry groups as well as the NAIC, which has long sought to protect insurance companies’ assets and thereby protect policyholders.
2. NARAB II
The National Association of Registered Agents and Brokers Reform Act of 2015 (“NARAB II”) was signed into law on January 12, 2015 in the latest effort to simplify and streamline non-resident insurance producer licensing. These efforts initially arose in response to the mandate of the Gramm- Leach-Bliley Act of 1999 (“GLBA”) to simplify non-resident insurance producer licensing through the enactment of certain reforms.
The provisions of NARAB II will become effective on the later of (i) two years from enactment of NARAB II (i.e., January 2017) and (ii) incorporation of the National Association of Registered Agents and Brokers (“NARAB”) as a non-profit corporation under the laws of the District of Columbia. NARAB II is expected to establish reciprocity and further streamline non-resident insurance producer licensing processes through the establishment of NARAB.
NARAB will be an independent non-profit corporation, not a federal regulator for insurance producers, controlled by a 13-member Board of Directors, which will include industry representatives as well as insurance regulators. Members of the Board of Directors must be appointed by the President and confirmed by the Senate. Notwithstanding enactment of NARAB II in January 2015 and NARAB II’s requirement that such appointments be made within 90 days, the President has at the time of this writing appointed only four individuals to NARAB’s Board of Directors. On January 13, 2016, President Obama nominated two current state insurance commissioners (Raymond Farmer, Director of the South Carolina Department of Insurance, and Michael Rothman, Commissioner of the Minnesota Department of Commerce), and two industry representatives (Thomas McLeary, founder and president of Endow Insurance Brokerage, a Chicago life insurance and benefits brokerage, and Heather Ann Steinmiller, general counsel of Conner Strong & Buckelew, a Philadelphia insurance benefits brokerage firm). Each of the nominated individuals is still subject to Senate confirmation. Until such time as all 13 members of the Board of Directors have been appointed and confirmed, progress in establishment of NARAB and implementation of true insurance producer reciprocity will remain on hold.
Developments and Trends in Insurance Transactions and Regulation 2015 Year in Review