Federal Developments in Insurance Regulation and Legislation
State insurance regulators, alongside the National Association of Insurance Commissioners (NAIC), are advancing initiatives expected to gain momentum before the NAIC Summer National Meeting in August. Meanwhile, federal developments within the insurance sector are also capturing attention.
The U.S. Treasury has engaged with state insurance commissioners regarding private credit markets, U.S. life insurance, and offshore reserves. Concerns persist over insurers' exposure to nontraditional assets and offshore reinsurance. In collaboration with NAIC, the Treasury is focusing on risk-based capital and the oversight of emerging business models. The Financial Stability Oversight Council (FSOC) reinforces these issues, advocating for vigilant regulatory compliance and monitoring.
The FEMA Review Council's Final Report advocates enhancing the National Flood Insurance Program (NFIP) resilience. Key recommendations include expanding private insurance market participation and implementing risk-based pricing strategies.
Reaffirming federal involvement in insurance, the Treasury has reformed the Federal Advisory Committee on Insurance (FACI). This occurs amid legislative discussions regarding the Federal Insurance Office (FIO), with proposals favoring a U.S. Insurance Representative within Treasury.
In antitrust developments, California's Department of Justice (DOJ) has joined a case on wildfire insurance practices, citing significant antitrust concerns independent of government actions.
FSOC's proposed guidance on nonbank Systemically Important Financial Institution (SIFI) designations suggests a shift back to a broader "activities-based approach," impacting large nonbank financial entities, including insurers.
A recent Executive Order from the White House promotes a cohesive national policy on artificial intelligence (AI), potentially influencing AI's application in the insurance industry. Concurrently, the Department of Housing and Urban Development (HUD) considers removing disparate impact liability rules affecting insurance underwriting and pricing.
On the legislative front, the proposed "TRIA Program Reauthorization Act of 2026" aims to extend the Terrorism Risk Insurance Program through 2034. It preserves its foundational structure while incorporating procedural refinements for continuity and effectiveness.