International Insurance Provisions Approved Under Economic Growth, Regulatory Relief and Consumer Protection Act

With 258-159 votes among the House of Representatives, a major regulatory bill comprising financial regulatory requirements had finally been passed. This new legislation includes provisions of international insurance negotiations that affect regional and small business insurance companies. The U.S President, Donald Trump, recently signed it as a bill known as the Economic Growth, Regulatory Relief and Consumer Protection Act.

Amendments and Modifications to the Legislation Bill

The bill includes certain modifications to the Dodd-Frank Wall Street Reform and Consumer Protection Act. It also provides targeted amendments to other regulatory requirements of the post-financial crisis.

The legislation bill establishes various securities amendments, consumer protections, and investment-related requirements. It preserves the elements of the 2010’s Dodd-Frank regulatory frameworks and added modifications. This resulted to a significant regulatory relief for particular regional banking organizations.

Noteworthy Provisions of the Legislation

The bill contains numerous provisions. However, the most notable ones include the following:

  • The increase in the asset threshold, otherwise known as the SIFI threshold, has evolved into two stages—from 50 billion dollars to 250 billion dollars. Banks that have this amount of assets are permitted to operate in a less regulatory oversight from FSOC.
  • Insured depository affiliates and institutions are exempted from the Volcker Rule if their assets are less than 10 billion dollars.  This allows banks and other insured institutions to engage in speculative trades.
  • A loophole can enable huge international banks to avoid certain regulations. Their assets must first be tallied and should be kept under that threshold of 250 billion U.S. dollars. The offer to close the loophole by the Democrat’s amendment was rejected.

About the Insurance Provisions

The new legislation adopted provisions from bills related to insurance negotiations. This proposal is known as the International Insurance Capital Standards Accountability Act. It has demanded a higher transparency in terms of insurance mandate and discussions. The bill is made for the U.S. negotiators with consensus positions in insurance standards or international negotiations.

An advisory committee was formed to monitor insurance policies. The committee focuses on insurance issues and international capital standards. They also have to make annual reports for activities at international standard settings.

Responses to the Insurance Provisions

Organizations in the insurance industry trade have praised the bill. One of the heads of federal government relations in Insurers Association has appreciated the inclusions of insurance standard provisions. People in the insurance trade industry believe that the legislation reinforces and covers the primacy of the insurance state regulations. In addition, they have viewed it as a bill that increases accountability and transparency to the capital standard of the international insurance process.

Since the U.S. has a state-based and unique insurance regulatory system, negotiations about it should be considered. With that, the provisions can ensure the system’s protection.

Ending Note

As the legislation does not amend the regulations itself, the agencies will be required to amend their present regulations for the new thresholds to be accounted.  Basically, the process will be time-consuming, particularly for regulations that are constituted on an interagency basis. However, these regulatory and legislative revisions could encourage acquisition activity and bank merger.  

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