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National Council of Insurance Legislators Calls upon Federal Reserve to Limit Examinations of State-Regulated Insurers

The Dodd-Frank Act provided the Federal Reserve Board with limited authority over certain insurance holding companies with federally regulated banking subsidiaries, creating some tension with the general rule, embodied in the McCarran-Ferguson Act, that insurance is regulated at the state level. The National Council of Insurance Legislators (NCOIL) has issued a resolution critical of the Federal Reserve Board’s use of that authority, stating that, in exercising its limited authority over these entities, “the Federal Reserve Board has over-extended its examination powers by routinely requiring insurance companies to supply information and responses to inquiries of the sort in practice that are the province of” state insurance regulators, “on whose work Federal Reserve Board examiners are statutorily required” to rely. This, the NCOIL resolution states, “will most likely conflict with, the jurisdiction of State insurance regulators over solvency and market conduct regulation or, at best, will be duplicative.”

The NCOIL resolution further:

  • “calls upon the Federal Reserve Board to direct its examiners that the insurance operations of state-regulated insurers . . . are regulated by the individual states and that the Federal Reserve Board’s examinations are, to the fullest extent possible, to rely upon the examination reports and other work of state insurance regulators and not to duplicate and/or conflict with the states’ regulatory powers over the insurers’ market conduct or solvency”;
  • “encourages Congress to provide oversight and, if necessary, enact legislation to ensure” that the Federal Reserve Board abides by these limits; and
  • “calls upon the Federal Reserve Board to consult with, defer to, and rely on to the fullest extent possible, and to avoid, to the fullest extent possible, duplication of, the work of state insurance regulators on matters involving the regulation of insurance operations and solvency of insurers, regardless of the insurers’ affiliations with federally-regulated financial institutions.”

Resolution Asserting McCarran-Ferguson Reverse Preemption over the Supervision of Insurance Companies by the Federal Reserve Board and Its Examiners(Nat’l Council of Ins. Legislators, Dec. 8, 2018)

©2011-2019 Carlton Fields Jorden Burt, P.A.


About this Author

Jason Brost, Carlton Fields, Corporate Lawyer

Jason Brost’s practice focuses on representing financial service companies in complex commercial disputes and defending consumer class actions. Jason has also represented a wide variety of businesses and individuals in commercial, securities, insurance coverage, and employment litigation matters, as well as in responses to investigations by law enforcement and regulatory organizations, including the U.S. Department of Justice, the SEC, and FINRA. Jason is actively involved in numerous pro bono matters, which include representing asylum seekers, handling criminal appeals...