Completing its review of US financial services regulation, the FSB has recommended that the US authorities move toward federal oversight of insurance, as opposed to the current fragmented state-based supervision.
The US federal and state authorities have also begun to address the FSAP recommendations on the insurance sector, for example the Federal Insurance Office was established under the Dodd-Frank Act and the insurance company has recently been designated as systemically important. The FSB also noted that US state regulators have increased information sharing and coordination with federal authorities, and that they have taken steps to improve insurance group supervision, modernise solvency requirements, and improve disclosures.
Despite these accomplishments, however, significant additional work is required to fully address the FSAP recommendations in this area, the FSB said in a statement. It said that the absence of federal regulatory powers constrains the ability of the US to ensure regulatory uniformity in the insurance sector.
“Given the drawbacks of the current regulatory setup, the US authorities should consider whether migration towards a more federal and streamlined structure may be a more effective means of achieving greater regulatory uniformity”, said the FSB.
The report also recommended that the Federal Insurance Office enhance its monitoring of the insurance sector and be further strengthened to be able to take action to address issues and gaps identified. The FSB would also like the US authorities to introduce bolster group supervision and to implement the FSAP recommendation concerning the terms of state commissioners' appointments.
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