Stability Council Keeps Right to Cry, ‘That Insurer Is Drowning!’
December 10, 2019 by Allison Bell
Officials at the Financial Stability Oversight Council (FSOC) say they will communicate better, emphasize general financial safety advice, and think harder about cost-benefits ratios when they decide whether a life insurer or other nonbank company poses a serious threat to the U.S. financial system.
But FSOC officials will still have the authority to give an insurer’s state insurance regulators “nonbinding recommendations” about what do if it looks as if an insurer is diving head first into the shallow end of the pool, and to tell the public why it gave the state regulators those nonbinding recommendations, according to a new batch of FSOC “interpretive guidance,” or explanation of how FSOC interprets the rules for designating insurers and other nonbank companies as risky.
For big insurers that look safe to FSOC, the new rules could mean fewer regulatory headaches.
For insurance agents, the new rules could mean that, any time FSOC gives “nonbinding recommendations” about an insurance company to other regulators, that would be something to watch closely.
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