Large insurance companies fear lack of industry expertise on federal council

Large insurance companies are reportedly fretting about the upcoming departure of an important figure on the Financial Stability Oversight Council, the federal body responsible for monitoring the stability of the national financial system. For readers who are not aware, the Council was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and has the aim of identifying and responding to risks to financial stability at a national level.

To this end, the Council relies on the expertise of federal and state financial regulators, as well as an independent insurance expert appointed by the President. Roy Woodall, the man who is currently serving as the independent voting member on the Council with expertise in the insurance industry, is set to leave when his term ends this September, and this has larger insurers concerned.

Woodall is currently considered to be the most influential person in the federal regulation of large insurance companies, since there is no federal insurance regulator at present and the Council has the ability to determine whether large insurance companies are subject to higher capital requirements and oversight of the Federal Reserve.

Large insurers are concerned that Woodall’s departure, without a quick replacement by President Trump, will spell trouble for them. Some of the insurance companies that have been placed under increased federal oversight are seeking to avoid that oversight, and believe they will be at a disadvantage without a replacement for Woodall. Nevertheless, he does have a reputation for neutrality.

For large insurance companies, of course, compliance with insurance regulations is an essential aspect of doing business. States have long been regulated at the state level, but recent years have seen the federal government’s growing influence in insurance regulation. In our next post, we’ll say a bit more about this, as well as the importance of working with an experienced attorney to effectively manage legal and regulatory compliance efforts.